Romanian Market Network Startup, ProfiCircle, Launches Its Beta Platform with €300k Investment
What happens when you combine the strong social effects and scalability of a social network with the lucrative business models of marketplace and SaaS companies? The enticing notion of a market network is born. Globally experts believe that this will turn into the business model of the decade and bring significant impact across all major industries as its principals can be replicated in all industries that require complex services in order to function. Right now, in the context of Covid-19, e-commerce is spreading across more and more industries and the demand for modernization and optimization of logistics spaces is bigger than ever.
With the vision to provide commercial equipment and construction businesses with industry-specific workflow solutions for efficient and continuous collaboration on long-term projects, the Romanian entrepreneur – Eduard Daniliuc, launched ProfiCircle in 2019. Being the first such B2B market network platform, ProfiCircle enables buyers to source, buy, and manage long-term projects online across many sellers and service providers. Customers are able to receive instant quotations due to machine learning technology, which means that they have the opportunity to make multiple online auctions for several products or services within the project.
In the spring of 2020, ProfiCircle received a pre-seed €300k investment from Romanian angel investors to launch the Beta version of its platform. The CEO and co-founder of the platform, Eduard Daniliuc, tells us more about the idea behind ProfiCircle, the meaning of the investment round, and shares what lies ahead for his startup and for the market network industry.
Trending Topics: How was the idea of ProfiCircle born and was there an identifiable market demand in the beginning?
Eduard Daniliuc: I have 15 years’ experience in the industry of commercial equipment, being a dealer for many manufacturers and suppliers, and closing more than 2.000 acquisition projects for commercial equipment in the EU countries. I know how difficult it is for buyers to manage offline such complex projects: traditionally, the buyer sends several RFQs (request for quotation), in many cases, they don’t include detailed RFP (request for proposal) to potential suppliers, in order to obtain the best warehouse equipment offer and related services. The process itself can last for months, involving e-mails, telephone calls, offline meetings, and a lot of people. Buyers can buy mainly from local suppliers, plus there is no price transparency.
We take into account the fact that the workforce in old industries is starting to be represented by millennials, who are used to digital tools in their daily work. Therefore, the idea to develop this business started from the need to digitize the mature commercial equipment procurement industry, with a market size estimated at $350b globally.
What does the investment round mean for your startup and what do you expect to achieve with the raised money?
With the first €300k investment round obtained from angel investors, in the Spring of 2020, we have launched our Beta version, which includes a complete flow of acquisitions and useful features for our customers, we have increased our team up to 11 specialists and we have started marketing campaigns and pre-sales. With the next seed investment round, we will start our operations in Germany, Switzerland, and other countries, we will develop new features of the platform and increase the number of employees.
How will the release of your beta version be conducted? And can you share how you conducted your alpha testings?
During the alpha testing, we detected many obstacles or serious errors and increased the quality of the SaaS product through customer validation. We then moved on to provide a better view of the reliability of the software at an early stage and simulated real time user behavior. Ultimately, we were able to fix critical issues and bugs continued to collect them from the end-users and further fixed them in Beta Testing. Now, the goal of the Beta version is to get customer feedback on the product and to make changes to the software accordingly. We continue to reduce product failure risks using customer validation and this allows us to test post-launch infrastructure.
What is your traction up to this point in terms of performance, revenue, and users?
After starting the pre-sale campaign three months ago, we received more than 110 requests and closed 24 deals on the platform, with over €500k gross merchandise volume. Until now, we have registered more than 55 manufacturers, dealers, and suppliers of services from EU countries.
What is the business model of ProfiCircle and how well are you positioned in terms of competition?
We are a one-stop-shop SaaS Market Network and our business model is based on a monthly subscription fee from the manufacturers and suppliers listed on the platform, with the price varying between $99-$299/month. Buyers, on the other hand, use the platform for free.
In terms of competitors, our main competition today is composed of manufacturers of commercial equipment and local dealers. Our platform is targeting them, and we believe that most of the major players will become our partners, by registering on the platform, thus shifting from offline to online.
What emerging and long-lasting trends have you observed in your industry? How has the Covid-19 crisis affected your market and your business in particular?
In the pandemic conditions, the demand to update/upgrade warehouses have increased significantly. As the e-commerce segment share has skyrocketed, more and more people choose to do business remotely and online. So, more companies look at automatic warehouse solutions in order to maintain a logistic flow adapted to the pandemic situation, given the fact that employees can’t perform their jobs like before.
So the pandemic ‘helped’ us in a way, because now buyers are more open to use online tools like videoconference and chat. Also, suppliers don’t have the possibility anymore to find new clients via exhibitions, offline meetings, or business travels and therefore, the crisis reduced new prospects’ inflow. Now they are more open to use our platform, in order to find new clients, in new markets.
What have been the hurdles and challenges from the beginning? What challenges do you expect for the next 12 months?
Since the start of ProfiCicle, we have realized that being a trailblazer makes it hard to transform an existing workflow from an offline into an online process. For the next year, we expect to face challenges related to finding the right way to apply our local experience in big markets like Germany, Switzerland, and France. Another challenge would be to develop a marketing strategy that will enable us to test different scenarios, in order to attract customers and to keep them engaged on the platform.
What are the future plans for your company? Are you looking for new investors, are you planning for market expansion?
We are preparing to move our headquarters from Romania to Switzerland by the end of the year and to start operations in Germany and Switzerland at the beginning of 2021. We also intend to hire 30 new specialists in 2021 in web development, customer support, marketing, and sales. Currently, we are trying to raise another investment with the goal to expand to new countries, make our platform better, and bring digital marketing know-how to increase the number of customers and sellers.