Strops Technologies founder Normunds Stepāns explains that, due to improved manufacturing technology, the next-generation camera will be cheaper and therefore more attractive to a wider range of clients. The prototype for the new camera is now ready, reports Labs of Latvia.
The business is also working on improving its system to make identifying traffic violations more automatic. Users will only be shown the more doubtful frames, and they will just have to press a button to confirm whether the car shown is violating traffic rules. At the start of 2024, the business will begin a pilot project to test the new system in Riga and check whether it works. “Effectiveness will improve by 95%,” promises Stepāns.
Seeking investment to implement ambitions for growth
This year, the business will provisionally reach €500,000 in turnover. The company already doubled the previous year’s turnover by the end of November of this year. Stepāns predicts that next year’s turnover will grow even more rapidly, reaching €2 million.
“By introducing a new product, we want to reach turnover of €50 million in the medium term. It can be done — the video surveillance industry is worth almost €30 billion annually and is growing all the time, because security worldwide is not improving,” he says.
The business therefore plans on obtaining investments of €1 million. Half of this amount has already been agreed to by investors. “The health of the business has never been as good as it is now. It’s not like we need investment in order to pay wages, but it is difficult to take the next step in our development without external investment. Growing organically is not the same as jumping, but in order to jump, our own funds are insufficient,” adds Stepāns.
Correcting mistakes by buying back shareholdings from investors
Stepāns admits that mistakes were made at the very start when attracting investment. “Lots of startups, us and our first investors included, made mistakes due to a lack of knowledge on investing in startups in society as a whole 10 years ago. It was therefore not uncommon for investors to want 50% of a business for tens of thousands of euro in investment, not realising that they were shooting themselves in the foot, because this prevents the company from attracting the next round of investments,” he explains.
The entrepreneur knows this by experience. When Strops Technologies wanted to attract their second round of investment, nobody wanted to invest after seeing the ownership structure. That was the moment they had to decide whether to remain in their existing situation, only able to grow as much as they were able with their own funds, or correct their mistake and buy back shareholdings from the first investor so that they could attract investors at healthier terms in the future. Stepāns chose the second option:
“If you have a goal, you can also find ways of reaching it. If you aim for a turnover of €50 million and you ‘only’ reach €35 million, that is much more than you would have made if your goal was €500,000.”
A couple of years ago, he had the opportunity to buy out the remaining shareholdings from the other owners, as well as repaying all bank loans. Stepāns is currently the sole owner of the company.
A challenging time for the electronics industry
Strops Technologies currently exports to 19 countries, mainly in Europe. The business also has clients in the United Kingdom, the United Arab Emirates and South Africa. Stepāns admits that the past two years have been “very dark” for the electronics industry due to a lack of components and disrupted supply chains. He doesn’t remember another time when it has been impossible to buy the necessary components. This forced him to transform the business, restructure their operations and start outsourcing manufacture.
“Although outsourced manufacturing is slightly more expensive per unit, the EBITDA is much better. In 2021, EBITDA for turnover between €250,000 and €300,000 was around €20,000, but last year, with similar turnover, it was €110,000. This confirms that it is worth collaborating with external service providers,” shares Stepāns.
A surveillance system, not just a camera
Stepāns emphasises that Strops Technologies’ product is a video surveillance system, not just a camera. It differs from other systems in that it does not require infrastructure — electricity and an internet cable — to transmit data. The system can be installed on any post without the need to design an installation plan.
“Yes, it may initially seem that the cost of this type of camera is higher than for a standard camera, but when you add together all the costs — including design, installing infrastructure and the costs associated with this — our solution offers significant savings, both financial and in terms of time,” says Stepāns.
If the police or another institution discovers that violations tend to occur more often at a particular location, they can instantly place a camera there and get the city environment back in order. “We understand that we won’t replace all the cameras in public places, because they don’t make sense for some locations. But our experience shows that a city the size of Riga needs around 100 cameras, of which 50 should be these easy-to-move cameras which require no infrastructure,” explains Stepāns.
He estimates that larger cities require at least one moveable video surveillance system per 10,000 inhabitants. Smaller cities require one per 5,000 inhabitants.
Anywhere which requires video surveillance
The product offered by Strops Technologies can be used anywhere which requires video surveillance. One of the most popular uses for cameras is to monitor illegal fly-tipping. Stepāns emphasises that the costs incurred by the relevant services in manually collecting this rubbish as opposed to simply emptying rubbish bins are much higher. Governments who have to spend large amounts on this issue get actively involved in resolving these problems.
Lately, use cases for the products offered by Strops Technologies are changing. The business now has customers in the transport industry who use it to catch drivers using the bus lane, for example. A camera is installed by the lane and records everybody who drives along it. The algorithms developed by the company “catch” the moments when someone drives along the bus lane, and all the user has to do is to categorise whether the vehicle was public transport, a taxi, an electric vehicle, an emergency vehicle, or whether it was a vehicle in violation of the law which needs to be fined.
“The times when you could break the law and escape a fine are past,” says Stepāns.
This system can also be used to catch those who ignore red lights.
The business currently has two sources of income: selling cameras; and selling licences for the use of its website, which displays where all the client’s cameras are located, when batteries need to be changed, and so on. Over time, the company hopes to add a third source: a module for monitoring transit violations.
