16 October 2015

The money from the grinder

Published: vc.ru

Alexander Kolbas, the entrepreneur from Vladivostok, renounced corporate career at Samsung in favor of small technological experiment under the Far Eastern University. Together with his partner Marat Grishkov, they founded the company Terebra engaged in the production of screws for food processing. The story about the path from prototype to the first million contract.

"I was always surprised that no matter how much money I have brought to the project, this was not enough, — the entrepreneur from Vladivostok Alexander Kolbas twists in the hands an iron screw and tells how he appeared in mechanical engineering. — First, I hoped that one million roubles will be enough. Now we're getting close to four million and need more. But now it’s the understanding of how to do business — real numbers, economy, pricing. I paid my money to learn it all. Business school in real time".

Alexander is 27 years old. He has an education in management, experience in Samsung Electronics. There he realized that he wasn’t ready to build a corporate career. One day in 2011, he appeared on the event of the Far Eastern Federal University. There was created a project office, which had to develop the entrepreneurial spirit and building the startup infrastructure in the University. Alexander spoke with management, turned on the heat and led the project office.

"Every technology startup in the University needed a team. The hypothesis, that it’s possible to recruit students and they will work immediately, failed. In our project office were three people. Each took several startups and began to work at them", – says Kolbas. Sasha got three projects: medical startup Stone Patch, biotech-project for the production of malt Malting technologies and engineering project Terebra. The last looked the most promising, Kolbas entered in the share, and was closely engaged in its development.

Millions in the grinder

The main product of Terebra is a pressing screw. It's a metal rod with a spiral blade, which presses and wrings the raw material, separating it into solid and liquid fraction. The principle of operation is like in the grinder. The more complex the geometry of the screw, the more oil can be obtained from the raw material and the higher the margin of the oil producers. The feature of the screw Terebra is that it’s assembled from individual goals — so you can do almost any geometry. The screw press more than the analogues, wear out slower and increases a production efficiency.

History of project started 20 years before the appearance of Kolbas in the project. Engineer Marat Grishkov solved the problem of specific plant and got the technology that could become the separate production. In 1998, he received a patent for the device, the screw, and a few years later equipped in Khabarovsk the whole plant of soybean processing. Then it came to nothing.

In 2011 Grishkov arrived in Vladivostok with the intention to refine the technology and turn it into a business. Fell in the Far Eastern Federal University and got acquainted with Kolbas.

Alexander went into the project and began to invest money in it: "Marat Alexeevich didn’t work on the side, his main task was to develop the project technically, and mine – to provide him with money and resources. I took a piece of metal, brought it to the Bortnikov competition UMNIK, received a grant. Invested about 500 thousand rubles of personal savings, the same were borrowed from friends".

For four years Alexander has invested in the project two million rubles of his money and as much again has attracted with the grants and the subsidies for the development of small business. When the first tests of the screw were passed, it became clear that it's time to look for high-profile clients.

"In 2013, we launched one test press equipped with our screws, and received, to put it mildly, steep results. When I talked about oil producers, they did not believe and laughed in the face. Then I sent them a video of how our press presses oil," smiles Kolbas.

At the end of 2013 the technology was ready to expand. Now there was a necessity to find the production.

Manager at the bench

We sent the drawing to a bunch of companies and realized that almost no one can accurately produce a simple piece of metal by drawing. "It became clear that in Russia in general is a huge problem with metal. From small shops to large companies — nobody can do iron efficiently and in adequate money," Alexander adds that steel production for the company became the first serious challenge. Without small-scale production it was impossible to participate in the pilot tests at the plants of potential customers, but we had to do for our living.

"In early 2014 we signed a contract for the modernization of oil press with Chernyansky plant of vegetable oils. A few months we were looking for a contractor for the production of iron, but didn’t found anyone," says Alexander. In September 2014 Chernyansky plant told the partners that takes them to court because of the failure of commitments. "We worked it out, returned the deposit and kept a good relationship. Now we are negotiating about large-scale industrial implementation," recalls Kolbas.

But then, in early 2014, reasons for optimism were few. Alexander couldn't imagine why carving a piece of metal may be a problem: "In fact, until six months ago, I did not stand up to the machine and began to make iron myself, with my own hands, I didn't realize the problems. Then I realized that there are operations that are difficult not only for hands, but for understanding. Now most of the operations we do ourselves. I even mastered the specialty of milling-fitter-turner, to know the whole process. If I worked at a metal company, I would have received the third grade". In the end, the partners found a small production in Vladivostok, where they are allowed to do the screws on the weekends, while the equipment stands idly.

Around the same time, the Vladivostok plant "Process equipment" which had to become the first major client of Terebra, began to tighten a deal. "They initially rushed us, saying, hurry up we are waiting for the product. But when we were ready to show them the piece of metal, it turned out that it’s not particularly necessary. In parallel, they have invested about a million dollars in developing its own set of equipment to solve similar problems," according to Sasha, this period became one of the most critical in the history of the project. Two years of struggle — sine from steep results to empty pockets. To keep the contract with "Technological equipment", partners had to modify the technology seriously.

"The next day we took a very serious talk with Marat Alekseevich, and he convinced me that this is not the end and we will win", — Alexander admits that the desire to quit had he not once, but when he first felt hopeless and was on the verge of despair. However, the partner gave him confidence, and Terebra, he continued to fight for life.

Soon the money was found: it was possible to obtain the regional subsidy. Alexander with new forces undertook to organize the pilot implementation from the oil producers, participated in the Startup Village, entered the accelerator GenerationS. The pilots were accumulating feedback and recommendations from manufacturers, then there were negotiations. But the real contracts didn’t appeared.

Honey hole

"As they say, it was a blessing in disguise. The metal shop, where we housed, moved on fairly well-known site in Vladivostok, and our neighbors were the guys that build factories for the fish processing," says Kolbas.

Their technical director looked at the screws and asked him to tighten them so that it was possible to recycle the fish waste. "We spent two months negotiating, and finalizing a piece of metal, and eventually signed the first contract for 1.5 million rubles,"  says Alexander. Now Terebra mainly engaged in the processing of fish waste and continues to break the conservative market of oil producers.

A few months ago, Alexander met a businessman from Vladivostok, who suggested to build a plant for the screws’ production. The prospect to get his own shop and not huddle on weekends for contract manufacturing seemed tempting to Kolbas and Grishkov. The only condition of the new partner was a contract for the supply of screws to at least one strategic client. So in the nearest plans of Terebra — to sign one significant contract for 40-50 million rubles.

Kolbas thinks it's real: "Now there are negotiations with the Chernyansky plant and holding "South of Siberia". After GenerationS people began to look at us more seriously. This year I went back to the accelerator, for moving directly to the corporations that support the project. There is the interest from EFKO Group that produces vegetable oil "Sloboda".

In the next five years, Terebra plans to attract investments to build the plant and begin the expansion into foreign markets: "In Russia the market of equipment for the oil production is very small. A maximum of 500 million rubles a year, which is approximately 2 % of the world market. Asia and Latin America are much more interesting. Processing fish waste is approximately $ 50 billion per year. And there are also polymers, though we did not consider this market, but there is, too, a maneuver room".

As noted Kolbas, the biggest challenge in working with manufacturers and the real sector is to convince customers to take a risk and do something first. "We fully understand them and always try to meet the needs, to optimize the conditions. Perhaps, that is why we were able to break through the valley of death. And there is much more in the future".

Experts’ commentaries

Evgeniy Borisov, the investment company Kama Flow partner

One of the important trends of modern engineering — the focus on optimizing the technical and operational characteristics of the equipment due to the modernization of individual elements. And, of course, this is not the only Russian trend. However, for Russia it is especially important, because the material base (machines and other equipment) goes into overdrive, including high-tech industries.

Any start-up like Terebra, allowing a smart and relatively inexpensive modernization of machines and to obtain the clear economic benefit should be welcomed. Especially if it works on a service model, that is, earning not only on the supply of components for its customers, but on service and technological consulting. And the fact that in Terebra people are ready to go even further and use the principle of profit sharing, shows a certain "ideological" maturity of the founders of the project.

Tatiana Sanina, Director of business administration of the Department of the oleochemical business of EFKO Group

The Terebra technology is very interesting for companies that use in their technology chains the pressing and extrusion. It allows to increase production efficiency without a complete reorganization, only due to conceptual new ideas. For EFKO such solutions are particularly interesting and relevant, because we are rapidly developing and are in constant search of innovative projects in all fields related to our main business areas.

It concerns the modernization of equipment for receiving, cleaning and processing of vegetable oils, the new express methods of quality control for the food and non-food products, oleochemical projects and biotechnologies in the food industry, fodder production and waste management and more.

In addition, I would like to note that it is always a pleasure to work with such dedicated and professional teams as Terebra. We are interested in the support of such talented people and giving them the most comfortable conditions to develop their potential through grants and partnership projects, and also giving them the opportunity to join the staff of the company on interesting conditions for them.

Oleg Malsagov, entrepreneur, head of the industrial branch of the BiotechMed of accelerator GenerationS

I knew Alexander’s project much later than Alexander. It was nice to meet the man who almost alone tries to stir up the innovation sector of Vladivostok. I was very pleased to get acquainted with his project. The country is not very good at engineering, and here, on the Eastern edge of our country, two enthusiasts with a large difference in age found common language and do not fashion IT project, but a complex product — screw for oil expression. Wonderful.

The level of the product development is stunning, the novelty is striking with simplicity. I like the team: hardworking, determined entrepreneurs, experienced engineers. I suppose that the screw is only the first stage. Partners will have to make their own press. And intuition suggests that the project will become successful: many successful components have developed in it.

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