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Changemakers

How four startups explore new business models for maritime

CHANGEMAKERS: HOW FOUR STARTUPS EXPLORE NEW BUSINESS MODELS FOR MARITIME

Startups Interviewed: Kristian Andreasen, Founder, Kanda Kristina Lynge, Martin Nielsen, Jesper Holmgren, Founders team, C-LOG Henrik Uth, Founder, SYVR Deanna MacDonald, Founder, BLOC

Foreword The maritime industry has not been in mind, the entrepreneurs take on challenged by new business models areas ranging from enhancing safety in the same manner as other indus- through training (Kanda), digitalis- tries. Cargo owners’ needs around ing management of seafarer creden- shipping have remained relatively tials (C-LOG), to providing a global constant – to get the goods from A marketplace for surveyors (SYVR) to B at a competitive price, on a reli- and building a shared infrastructure able service. based on trust (BLOC). But things are changing. Digital freight We hope the learnings here serve as forwarders like Flexport and online an inspiration for exploring maritime retailers like Amazon push the tradi- ventures. tional freight forwarders by offering a customer-centric, digital experience, which could spill over into shipping. Adding to this, new regulations come into effect, like Sulfur 2020 and IMO’s commitment to reducing CO2 emis- sions by half by 2050. Many maritime players are searching for alternative revenue streams and experimenting with emerging technologies. So, where do the opportunities lie? How do we tap into the right resourc- es? What barriers await and how should we tackle them? In 2018, Rainmaking established a Maritime Innovation Hub at Pier47 in Copenhagen with support from the Danish Maritime Fund. This com- pilation of interviews is a window into the Hub, as four startups share Sayaka Nakagawa their approach to creating new Maritime Innovation Hub Director business in maritime. Their stories Rainmaking Transport all point to one reality: in order to build solutions that make a lasting Johan Vardrup impact, you must work with multiple Head of Communications players across the industry. With that Rainmaking at Pier47

Kanda: Bringing AR & VR learning to 1maritime teams Kanda offers a wide range of solutions in Virtual and Augmented Reality (VR/ AR), data consulting, BIM content, development, and visualization. Their clients span industries and include Maersk Drilling and Siemens Gamesa within maritime.

How did Kanda start? funded projects, but it requires a lot Back when I was studying civil en- of administration. Today, we typically gineering in university, I wanted to deliver consulting-based work to our take some of the projects we worked clients, which we want to use a step- on and bring them from academia ping stone. When we see something to the real world. We always had a in our consulting work with the client focus on prototyping, engaging with that has a broader commercial poten- the actual users, and testing technol- tial, say as a SaaS platform, we would ogies, which were probably a little work with the customer to develop a bit too early for mass market adop- joint ownership model and then spin tion. The technologies we work with out a new company. We want the now, are mainly game development people who have been working on it in Unity, VR and AR technologies. in Kanda to work in this new venture, We work across industries but with so people in Kanda with an interest a focus on energy, both offshore and in being partners and owners of a onshore. startup will have the opportunity. These spinouts will have a timeline of How did you end up focusing on 3-5 years to be scaled and sold off. those industries? Then if they want to, the former team Through trial and error. We started members can move back into Kanda out in the educational space develop- and maybe start identifying a new ing game-based learning to primary spinout. The challenge in getting schools, then moved on to health this going has been in aligning ex- care, but we didn’t see a strong busi- pectations with corporate partners, ness case in those sectors with the especially around the fact that it can solutions we were offering. Then fail and that there will be iterations slowly, by introduction and being before we nail it. at events, we got introduced to the energy and industrial sector, and Maritime often gets the criticism we finally reached a stage, where that it is very conservative. What we could develop real products and has your experience been? have a sustainable business. We talk with people from different kinds of industries and the first thing How has your business model devel- everyone says is, “We’re a very con- oped since the beginning? servative business. We’re very slow I have never been good at writing moving.” Everyone says that. Most in- business plans and pitching for in- dustries are actually fairly steady in vestment, so we do not have any in- the pace they are moving. However, vestors. Just great customers and a the maritime industry is special, since nice bank. We had some government they have a lot at stake, when they

adopt new technologies. They are What are your goals for 2019? carrying 90 percent of global trade. We want to grow less. We grew a They need to have the technology hundred percent last year, if we do tested and proven before they im- a headcount and look at our turn- plement it. Because, let’s be honest: over. That was too much. We need to new technologies arrive with a lot of structure what we got now. Make the bugs. needed processes without becom- ing excessively process driven. One Who have been the driving forces of the things we focus a lot on is in- on your journey so far? ternal knowledge sharing. When you Very little, if anything of our success have a small company of less than 10 can be attributed to what I have done. people, knowledge sharing comes Our first customer, Martin Peders- naturally. When you are 30 people, en, worked in Grundfos at the time. it gets more challenging. We intro- I thought our initial meeting was the duced a concept Buddy-Makker. It worst one I ever had. He did not seem comes from the military. You are as- interested in what I was offering, but signed a buddy who you make sure then he actually started up very small is okay in the broadest sense. The projects with us and was extremely two buddies meet weekly or bi-week- good at understanding the entrepre- ly for an hour and sit together and neurial approach. He pushed us to talk about what they are working on, define what it was we were going to why they chose one approach over deliver and not charge too much. He another and so on. That means you was really a guiding force in how to always have someone who can sanity build a project. 90% of what I know check what you are doing and have a comes from what I learned in that way of transferring knowledge from period from him. Martin is part of one project to another - something our advisory board today for a good we felt was increasingly difficult. reason. We have also been lucky in landing customers that gave us open What advice do you have for other feedback and referred us to new cus- entrepreneurs starting up in mari- tomers. Most of our business has time? come through word of mouth, which Remember that everything is de- replaced much of a traditional mar- pendent on who you are speaking to keting effort. After eight years we and the context. This is relevant for are only now getting a website that every industry. You never know what tracks our visitors. is going to turn out to be the big turning point.

One of the biggest mistakes I ever made happened a few years back, when I was in a plane sitting next to the VP of National Oilwell Varco, a key player in everything digital in the oil industry. I was explaining him about VR and what it does. And he was in- terested in a follow-up, so I got his business card, but since I was unable to find anything about NOV online. At the time I never got back to him. It is only later, I found it was probably one of the best opportunities I ever would have in the energy market. So, follow up, even on the ones you are unsure what will come from.

C-LOG: Putting safety 2first for seafarers C-LOG works towards digital certification and validation of seafarers’ identity, competencies and skills. The Danish startup builds upon a blockchain- enabled infrastructure, which allows transparent and safe data collaboration among stakeholders in the maritime industry. Their goal is to scale this system and facilitate industrywide collaboration through the untapped potential of shared data and AI.

What is the vision for your venture? to the international level, combined We want to become the industry with individual recruitment standards standard for identifying and verify- set by the shipping companies. On ing credentials for seafarers. Today, that note, it has been reassuring to seafarers carry around a thick folder see that the companies have much with paper-based certificates issued higher demands, when it comes to by authorities and training institu- data safety, than the general regu- tions, which shipping companies and lations. They buy into our agenda, crew management agencies must which makes it easier. verify, when seafarers are deployed to a vessel. On the digital side, the What have been some of your standard is email exchanges of pdf biggest challenges? copies, which is risky from a data The biggest challenge has been the security aspect. We want to create difference in speed between us and a full digitalization: from the point the more established players. This of issuing seafarer certificates and is probably a general challenge for managing them, to helping shipping startups across industries. Another companies and crew agencies verify challenge has been to get access the incoming manpower embarking to data. Providing access to data to each ship. a startup who may not be around in three months, can be concerning. How did your entrepreneurial Last but not least, the lack of aligned journey begin? requirements for seafarers continues Our co-founder Jesper Holmgren to create work for us. used to be a seafarer, and we knew there were inefficiencies in this space. Do you consider partnering with a C-LOG started off being about a solu- corporate to bring your product to tion for seafarers to manage their cer- market? tificates in a more secure way. Then, Unlike fintech startups who need to as we started speaking to different partner with banks due to financial parties, the shipping companies, the license requirements, we do not have crewing agencies and authorities, we to be tied to a major player in mari- learned that certificates were only a time. We explore partnerships at the small part of authenticating seafar- infrastructure level, but it has to feel ers’ competencies. As we developed completely necessary. At this point our understanding through speaking our platform is built across different to different parties, it became clearer clouds and can integrate with the that this was a much more complex range of systems agencies and ship- problem. There are different regula- ping companies use to manage their tory requirements from the national employee data. More actively, we are

looking for neutral business angels with a strong network and a belief in our product, so they can help bring it to market. Looking ahead, we will need global partnerships, because different countries will require differ- ent market approaches. Asia is one of the regions with a trust in paper so persistent that we cannot do a co- py-paste from how we entered the Nordics. Finally, what advice would you give to people considering a startup in maritime? Get your target customers in the room as early as possible to vali- date your idea. As Rob Fitzpatrick advises in “The Mom Test,”: Do not start building your product until you have learned about their real pain points. We have also focused on not to over-innovating or remove a large, industry process in one go. It is important to make incremental changes that give people a feeling of being onboard.

SYVR: Updating the 3surveyor industry SYVR is a Danish startup digitalizing the marine surveyor market. Surveyors are relied on as a neutral third party, to conduct inspections of a ship and/or its cargo. SYVR provides a marketplace for insurance companies to find surveyors based on the quality of their service and experience.

What is your ultimate vision for or East Africa and South America, SYVR? where there is yet to be discovered To be the marketplace of choice for good surveyors. Today, you would fly marine inspection by providing a good surveyors in. It costs time and global, open and transparent playing money, but it’s inevitable since you field. don’t know who’s out there locally. So, with a marketplace like SYVR, SYVR is the brainchild of Survey As- Survey Association may lose on the sociation of which you are the CEO. long-distance businesses, but gain How was SYVR born? on the local survey scene. Ultimate- The marine surveyor business has ly, though, this is the way the world traditionally been driven by relation- is moving, and we believe the gain is ships. Today, if insurance companies bigger than what we may lose. need surveying in an area their ex- isting contacts do not cover, they, How big is the problem today? most often, use the Lloyds Agency If you are an insurance company, and Network. which is an online directo- there is a casualty, a good surveyor ry of surveyors approved by Lloyds would make sure that the claimed globally. However, there is no way of amount is as accurate. The surveyor knowing how skilled or experienced can also support the other party – each surveyor is nor who the attend- the shipowner or cargo owner – and ing surveyor would be. In addition, secure the right evidence and doc- the market has been quite soft for the umentation, so the claims process last 10-15 years, flooded with survey- becomes fast and fair. It is amazing ors who left big corporations to set the amount of money a good survey- up their own shop. SYVR is Survey or can save the insurance company Association’s response to this market by being objective. That is what we backdrop. We want to leverage our want to promote in the industry. In network and experience from being addition, the premium paid in the in the market for the last 100 years, market is not enough to cover the to make the market more efficient, claims. This has been going on for transparent and capability driven. 18 years, to the point that it creates a loss for the hull & machinery in- Do you consider SYVR a digital surance product. There is so much product for Survey Association? leakage in the claims process caused No, it’s much broader than that. We by bad surveyors. We want to rectify see a trend in the market now with that. clients preferring more local sur- veyors. Imagine you need to find surveyors in remote areas like West

What have been some of your 10 percent of the hull & machinery biggest challenges? global market (10-12 clients in Scan- Changing the mindset for the ones dinavia and London) and these are who book a surveyor has been the Survey Association’s clients too. We hardest. We have the biggest insur- would not have been able to launch ance companies onboard and we like this, if we had been owned by a have buy-in at the C-level, but not single insurance company. quite at the operational level. The big surveying companies are also What advice would you give to showing resistance to our platform. people considering a startup in mar- This is because their business is built itime? on relationships. The smaller survey- Apart from perseverance and stub- ing companies and individual sur- bornness, accept that it is a conser- veyors like it, because it provides vative industry, and have a strate- them an extra sales channel to get gy for how to deal with that. For us, into London and Scandinavia. And of the strategy was to identify and use course, given this is a marketplace, it trend setters among market leaders has also been hard to reach the crit- – such as Tokio Marine HCC, AXA XL. ical mass and tipping point, where it Among them, management level en- is no longer a question of what you courages their case handlers to use stand to gain from our platform, but us. Now we have to strengthen that what lose, if you are not on it. connection to the handler level and demonstrate the value of our plat- What partnership approach have form. you taken so far? A multiple partner approach. But we took a key step as the Survey Associ- ation to enable this. The Survey Association has always been owned by an insurance company, for the last 25 years, it was owned by Codan. Because of this, it was difficult to get business from other insurance companies. I came in six years ago to diversify our client base. Finally, in 2017 we did a man- agement buyout to become truly independent. And this mirrors over to SYVR. So today we serve multi- ple insurance companies. We got

BLOC: Building trust into the shared 4infrastructure BLOC (Blockchain Labs for Open Col- laboration) is bringing together indus- try partners and technology providers under the collective ambition of solving for grand challenges in maritime. No matter the individual collaboration, their approach is based on industry wide trust and inclusivity.

How has your business model and error and experiments. There are evolved since you started? a lot of solutions we are either devel- We’ve always been trying to fill the oping or consulting on, so we take on gaps in shipping and blockchain. Our various roles whether we form con- approach is collaborative: Rather than sortia or provide consultancy as a doing it alone, we form consortia and one-off. projects with many different actors in Our role is to build a good governance the maritime industry. We spent our structure, so we can ensure this is 1st year doing research, and our R&D a playground for others to develop arm is still the mothership of BLOC. on without becoming a monopolis- This is where we take in grant funds tic partner. Whether it is providing and do our early experimentations sound scientific research behind the and demonstrations. In addition, we solution, validating it or bringing in have recently developed a consult- different industry players to build the ing arm. There was an interest in how business case or building the tech- we create technology from an up- nology itself - we can do all of that. stream and inclusive process. But we It is not necessarily ready to go to also experienced a general willing- market in the end, so we keep a long- ness to participate amongst industry term perspective. This makes grant players, for instance in a feasibility funding compulsory for so much of study for blockchain in shipping, or what we do. in new solutions linked to bunkering. Consulting allows us to help those Can you share your experience from companies that do not want to exper- working with grant funds? iment within the consortia model or We have received funding from The that want to first test out options and Danish Maritime Fund, Climate-KIC, ideas. Finally, we are also developing Copenhagen Fintech Lab, and ventures with other companies. Lloyds Register Foundation. With Lloyd’s we´re looking for new busi- How do you balance your research ness models and revenue streams, DNA with the commercial compo- which is typical for our approach to nent? grant partners. Many research funds Our research arm supports each focus on how emerging technology business case we build. We are con- can be applied in the real world. We scious of not only validating a tech- often partner with them for work that nical model but also understanding comes a step before actual use cases. different metrics - the environmental, We build a product demonstration social and governance aspects. Then and the needed infrastructure, so we we use that de-risked space to un- can test it. derstand and create progress by trial

Blockchain solutions form a key area the attendees came forward and said for you. Can you break down your the most corrupt supply chain in the process for validating, piloting, and world is in bunkering. Then we knew commercializing these projects? what to target. Our more recent work We design a consortium with one within crew certificate management, actor from each part of the supply happened after it came up as a big chain we are tackling. Then we bring challenge at several events with the all of them together and investigate Global Maritime Forum. The people the problem space and trace the ex- that reach out to us with a problem isting processes. We host workshops form the basis of the consortia that and meetings, where we aim to val- will contribute to a solution. And we idate the solutions across parallel only move on it if blockchain makes tracks: one focused on the technol- sense to apply. ogy itself, one on business devel- opment, and one the legal aspects. Can you tell us more about how you After that process, we try to demon- work with your consortia members? strate the solution in a virtual setting Some of the partners become long for testing and iteration with the con- term partners. Heidmar, the tanker sortia. If the demonstration is proven operator, is a good example. C-level feasible, we do a scaling pilot real or not, when you find the change- world-setting for a certain amount makers, you really unlock a lot. For of time. From there, we ready the example, Isabel Tatu from Heidmar product for market and create enter- has been sharing so many connec- prise grade solutions, which we will tions for the consortium working commercialize ourselves or through on our bunkering demonstrator and a joint venture with partners. Heidmar has also joined our crew certificates demonstrator as well. How do you choose which problems These people are not just interested to tackle? in one-off cases but what it means to We have an open call out to the fully digitize and integrate new solu- maritime industry on our web page, tions in maritime. We are very open where many players submit prob- about what we need. We bring in lems. Secondly, we devote time to people that can fill some gap in our be present at industry events, so toolkit. That is why we started working they know that we are looking to with C-LOG, another startup that demonstrate the next solution that works with the digitalization of crew will solve a shared challenge. Our certification. We’re not competitive, first demonstrator came from a work- and we believe in creating networks shop, we did on blockchain and an- everyone benefits from and collec- ti-corruption in maritime. Several of tively solving for problems that are

bigger than what any one company could solve for on their own. Where do you think the innovation culture in maritime is headed? There is an assumption about skep- ticism and nay-sayers towards in- novation in maritime. In reality you have an industry that are – often fairly - concerned about newcomers who want to simplify complex issues. When we take in industry leaders, we select the first movers. Take Maersk for example. They are involved in our development of a monitoring and verification system that will shape the next stage for bunkering assurance. Our framework allows Maersk to be an early adaptor, while the project remains open to the rest of the in- dustry. This is a shift in the overall culture. Come one, come all, but do it in a sense that we tackle this togeth- er and share in the benefits gained. What advice would you give to en- trepreneurs starting up in maritime? Focus on a specific problem and thoroughly attack that problem from end to end. It should be connected to the next person in line or next aspect of the problem to be solved. There is no one company that will solve it all. That approach has worked for us. But it takes a great team with a will- ingness to pursue multiple revenue streams, such as consulting in our case. And patience: A spinout project might generate a longer-term profit, it just takes time.

Rainmaking is a corporate innovation and venture development firm. We create, accelerate, and scale new business with the world’s leading corporations and entrepreneurs. Are you interested in exploring venture opportunities and co- creating? Then contact Sebastian Lykke Møller about our Transport Venture Studio, [email protected] Are you interested in scouting the best startups to partner with? Then contact Erik Christian Lund about our Trade & Transport Impact program, [email protected] Are you interested in sharing office space to spar and support each other with startups like these? Then contact Annika Rømer about Maritime Innovation Hub at Pier47, [email protected]