Author: Henrik Dagmalm
Leveraging corporate value through Public Funding
– Case Study of SafeLine Sweden
The success story of SafeLine Sweden AB (SafeLine) begins with the entrepreneur Lars Gustafsson and his long experience in the elevator industry as well as his deep understanding of the needs of the buyers and the installers of elevators. Established in 1994, SafeLine has grown tremendously over the past 20+ years with a reputation for superior quality. In the last five years alone, SafeLine has doubled its turnover while maintaining profitability and today the SafeLine Group reports revenues of 20 MEUR. Over the years a variety of financing has allowed SafeLine to expand as well as take risks, including 300 000 EUR of public funding which has helped the company to take decisive development steps and greatly contributed to this growth. The company became so attractive that in 2016 the majority of the group was acquired by a venture capital company which identified the additional potential for growth.
SafeLine develops, manufactures and sells emergency telephone systems for elevators and other related products. If you are in an elevator in Sweden and have a problem which requires you to immediately contact a repair person, it is highly likely that you will communicate with the repair operator through the SafeLine system.
One of the strongest driving forces behind SafeLine is technological development, which is in turn governed by the needs of users, customers and installers of elevators. In addition, SafeLine chose early in its development to invest in the export market. Today, SafeLine is positioned as a technical knowledge leader in the elevator market and has export sales to approximately 10 countries in Europe.
“Entrepreneurship and strong growth require a certain amount of risk-taking, both technically and commercially,” says Lars Gustafsson, founder of Safeline. “Our company regularly makes various types of investments and our goal is to have a low-to-medium level of risk in our strategic business development projects,” continues Gustafsson.
Successful entrepreneurship is usually characterized by a balance between long-term planning and exploiting opportunities that arise. Certain opportunities for effective development of a company sometimes require a higher amount of risk-taking than the decision-makers are willing to take. Lars Gustafsson and SafeLine have encountered a number of such opportunities over the past decade, and on three occasions, SafeLine has chosen to manage the higher risk through public funding. In these cases, the public funding agencies have absorbed 50% of the risk in SafeLine’s business development projects. This allows SafeLine to maintain its lower risk profile while still investing in new business development ideas, and provides the government authorities with the opportunity to stimulate the implementation of strategic business development projects and help a company grow.
However, identifying the right ideas that will attract public funding, understanding the funding opportunities available and completing the applications requires both knowledge and time. Realizing this was an area outside their core competence, SafeLine turned to an expert for help. Excedea collaborated with SafeLine to develop ideas and pursue funding. Working together, Excedea and SafeLine won 200 000 EUR in 2015 from the EU Eureka Program for a high-level R&D project that SafeLine launched with KTH and a German technology partner, leading to a new product being launched on the European market. Excedea also helped SafeLine gain access to 50 000 EUR from Tillväxtverket (the Swedish agency for growth) when an innovative technology shift was introduced in the emergency alarm telephone system in 2009.
“The consultants at Excedea have helped us at Safeline to identify various opportunities for contributions and then write applications that have been successful. In total, we have won more than 300 000 EUR with Excedea’s help,” says Lars Gustafsson. “Excedea has also taken care of all reporting and cost accounting to the three different contributing agencies involved and this enabled us to fully focus on our business development,” explains Gustafsson.
Additionally, part of Excedea and SafeLine’s work together with public funding has been identifying opportunities to explore and test. Even if not implemented in the long run, these are valuable cost-saving opportunities for SafeLine. Lars Gustafsson explains:
“Excedea also helped us to apply for a grant to study the Chinese market for planned expansion in 2014. Thanks to the 50 000 EUR support from NOPEF, we made a particularly thorough feasibility study of the risks of an expansion into China. The feasibility study showed that we were unable to handle some of the risks associated with doing business in China. The preliminary study led us to refrain from establishing ourselves in China and gave us the opportunity to avoid a bad investment”.
The growth that Lars Gustafsson and the team at SafeLine have had historically and the growth they are now gaining with the new owners is based on their own merit. When new higher-risk opportunities have arisen outside SafeLine’s risk profile, public funding has made it easier for SafeLine to exploit these opportunities for strategic business development. Safeline, with Excedea’s help, has used public funding efficiently as SafeLine’s objectives have been consistent with the objectives of the funding agencies – to stimulate the implementation of strategic business development projects that provide a leverage for the company’s growth.
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