Ecocity - We create smart and sustainable cities
Our service evaluates climate and cost impacts of urban plans with only fraction of the time and cost that the consult analysis would require. Plans created by the user community form a global databank of sustainable city solutions.
Theory and practice
In 1975 Eero Paloheimo left his engineering company in the hands of his colleagues and took his family on a round the world trip. From this trip he wrote the first one of his 9 works on the society. Paloheimo has been a researcher, designer, entrepreneur, MP, professor and an opinion leader. Since the 1975 trip all his doings have been somehow connected to saving the world. The core message of the two time PhD in Technology is clear: The globe will be saved by utilising technology, not by deserting it.
In 1975 Eero’s son Pekka was 8 years old. Later on, Pekka has worked as a teacher and in different kinds of sales jobs and for the last 10 years before his current position as a management consultant. As Eero has been studying and discussing the state of the globe in his books, Pekka has chosen a more practical approach. He has cycled from Tallin to Odessa, from Nordkapp to Gibraltar and from Los Angeles to New York. Additionally he has crossed the Australian continent by walking. Hundreds of lonely kilometers have taught at least two things: our planet is worth saving and a man can do anything, if he wants it enough.
Ecocity as a starting point
Our company was founded in 2009 to design ecocities to China. Eero’s main work “The way towards a new Europe” was published in China in 2005 and was widely noticed. It looked like the Chinese would be the first ones in the world to build ecocities that would maximize the use of modern clean technology. Eero had the expertise and Pekka saw a business opportunity. The first assignment was given to the company by the city of Mentougou in 2010. First the company made a so called conseptual plan which was then followed by the actual masterplan project. The project gave the company a huge amount of experience and created a fine reference. The Chinese customer is still looking for funding to realize the actual construction process.
Ecocity Evaluator 1.0
As a professor in the Helsinki University of Technology Eero carried out a wide research program about the emissions of the Finnish forestry sector. That research and the game “Simcity” gave Pekka an idea. A scientifically reliable software that would simultaneously evaluate the climate impacts and costs of urban plans with sufficient accuracy could probably have a real demand in the global market. A company that designs ecocities knows where the emissions come from and can give advice to others as well.
The first version of the Ecocity Evaluator tool was ready in 2011. It wasn’t really a software but a collection of excel files with brilliant calculations. Additionally it was complex and challenging to use and naturally could not be sold as such. The climate impact analysis the Finnish cities and municipalities desperately needed could still be done by this tool. These analyses became the major source of income for the company and dozens of such analyses were done for many major cities in Finland including the cities of Helsinki, Espoo, Vantaa, Turku, Tampere, Oulu, Jyväskylä, Lahti, Mikkeli, Kotka, Lohja etc.
Expensive product orientation
Along with the analysis projects the product has been further developed with own resources. The target has always been that the tool would work on the global market. It would be fast and easy to use, even game-like and slightly addictive. In the beginning of 2014 it was decided that the company would aim directly in creating a SaaS so that there would be no production costs and a global user community could be established. The development was funded by consultancy work and the progress was slow. In the spring of 2014 the founders decided to invest 140 000 more of their own money to the project and also an investment company called Vision+ joined as an outside funder. Involvement of Vision+ was a major step ahead and gave the company a strong IT and SaaS background.
In the fall of 2014 the company was in financial difficulties due to too small income and too big expenses. The worst mistake had been (maybe quite typical for an expert company) certain self- and product-centered thinking. It was thought that only 100 % finalized product with all features could be sold and the customers did not have to be heard as their needs were known well enough. Time and money had been wasted to some technically demanding and fine details that after all were not important businesswise. It was decided that a demo version that could be sold had to be finalized as soon as possible and the sales had to start. At the same time as the expenses of the company were brought down by for example making changes in the personnel, Pekka Paloheimo took the lead in the production process as well and the board of the company was renewed.
Improved finances and the strength of crowds
The sales of test licences started in May 2015 and soon showed to be the right decision. The demand has been steady and during 2015 there were 17 customers that made the purchase agreement. The client list is impressive including cities, design companies and other companies as well.
The customer feedback has given the company some important ideas to the product development and the whole process. First came an idea which expands significantly the customer potential. The calculations can be done with real materials, products and solutions instead of theoretical ones. Additionally to its basic purpose the service as such works as a marketing channel for cleantech companies offering solutions to urban structure. Getting the companies involved multiplies the amount of potential users and advertising clients.
The second idea that came from the clients was to include a land use economy calculation to the service. This increases the usability of the service significantly. The third new idea arised during the recent year is a business model with which the service can be spread to new markets and global use. Fourth new insight was realizing the services’ importance as a data bank.
Mr. Petri Kotro was nominated as a second board member from the beginning of 2015. He has strong experience in user interface development and from agile and customer oriented software development methods. After Pekka took over the lead of the product development and Petri joined the team, the development work changed rapidly to be more straightforward and business oriented. Now the financial situation is fixed and the development path to the first commercial version of the SaaS is ready and all the development work done by the company itself (the calculation algorithm the service uses, the specs for programmers and the UI –plan) is ready. The programming work still has to be done. By the end of 2015 the company decided to open a crowdfunding round to fund this final development stage. As the service ultimately helps the whole mankind, it is justifiable to expand the shareholder base by crowdfunding.
Vår affärs- och marknadssituation
The climate change has its impact on both economy and public governance that are directly linked to our business. After the climate agreement of Paris it is predicted that the amount of climate impact analyses of urban plans will be multiplied during the next few years. At the same time the competition in the cleantech market will intensify.
Up to this point digitalization has been seen mostly in consumer-applications and in entertainment. Now it starts to take bigger role in the public sector and help in cutting expenses in the upcoming years. Time consuming and expensive expert work previously done by consultants will be replaced with special software and cloud services crucially faster and with less expenses.
Open data and cloud services enable crowdsourcing more effectively than before. Software which works as a service will continuously be further developed by the suggestions from users. The service provider can insist that certain amount of the plans done by users in the service, have to be published. This creates new value for the user community. All the plans made in the service (also the ones that are not published) form a databank. Analysis of this information creates new earning models for the service provider.
Primary users = urban planners
The main idea of the Ecocity Evaluator is that urban planners can cost-efficiently create more environmentally friendly urban structure.
Municipalities already evaluate the climate impacts of their urban plans widely and budget large sums for this work yearly. The demanding expert work is slow and expensive. Municipalities desperately need tools, with which this work could be done faster and more cost-efficiently. Examples and savings calculation of our service: (ATTACHMENT 1. Savings for municipalities - document only in Finnish)
Some of the urban planning is being made by private sector designers as well. It is predicted, that the climate impact analysis of urban plans will soon be mandatory. As majority of the municipalities use our service for the job, it is a natural choice for private sector as well.
Next level and added value = solution providers and universities
New urban areas utilize new cleantech solutions. Such are for example energy saving materials, products and systems. For the companies producing these solutions it is important to show the benefits of their products by calculations made by independent experts and be seen in suitable marketing channels. We install these solutions into our service. Thus it is possible to compare how different solutions effect. At the same time cleantech companies will receive independent evaluation of how their products affect urban structure.
Educational establishments can use the service to show how different choices impact both the economy and the climate. Students represent crowdsourcing at its best and universities will be used as data collecting partners, when the service will be localized to new markets. This open data that the service uses will be collected from different local sources as in Finland from Statistics Finland, transport statistics and consumer barometers. Furthermore, students are strategically an important target group; wide use among students breeds the next user generation.
Analytics and the third level beneficiaries
The core of our business model is that in addition to the primary users there are large interest groups that will benefit from the use of our service. Besides the mentioned cleantech companies and universities, there are for example all companies and communities that work or are interested in the construction industry. This is why the service can reach exceptionally large user volume even as it is a so called professional tool.
The primary users continuously create new information into the service. As this information is automatically saved into the system, it at the same time becomes useful for other users. With analytics installed into the service, it is possible to produce information for example on the trends in urban design and construction industry and the differences in trends between different markets. For researchers, construction companies, land owners and developers, media and other interest groups this information is valuable. Same information is not available anywhere else. Examples of the use of the data the service will be collecting: (ATTACHMENT 2. Data the service is collecting - document only in Finnish).
Value of the collected data will increase as the service spreads to new markets and the user volumes increase. This is why we believe that already before the milestone of thousand users there will be seen a so called snowball effect and the user volumes will increase by accelerating speed.
Crowdsourcing & crowdfunding
Crowdsourcing & crowdfunding are essential elements in the growth strategy we’ve chosen. Crowdsourcing is at its best both developing and marketing. Urban planner, a student or a salesman of a cleantech company that gets his idea realized in a global SaaS is an important marketing resource. By crowdfunding we are basically looking for the same thing from slightly different perspective. Our new owners can also give us valuable development advices and naturally it is in their interest that the user volumes grow as big as possible.
The primary use of the service creates better environment for all of us. That is why it is only natural to call in larger groups of people to develop, use, and market the service and benefit also financially from our success. Not just professional investors.
Market potential and competition
Though it is very difficult to define the global market potential, we have a reasonable vision of that. This vision is based on the knowledge and experience from the sales of the test licences in Finland.
38% of communities and design companies that have received a presentation of the service have made the purchase until now. None of the potential customers have denied the need and it is fair to expect that the final percentage of users in these customer groups will be around 50 – 75%.
Among cleantech companies the corresponding percentages are 19% and from 30 to 40%. On the last slide of the presentation figures of 40% (communities) and 20% (cleantech companies) have been used. The whole market potential of the domestic market is based on the fact that there are 313 potential communities and 87 design companies in Finland. Some of these will purchase more than 1 license, but that has not been taken into account. The row “other potential” means Cleantech companies, Universities, construction companies, media and all others that could purchase. The relation between the two potential customer groups has been kept the same in other markets as well.
The two lowest rows show what the market potential is with an access fee of 5000 euros and an annual user fee of 2000 euros.
Sales and opening new markets
We believe that internet will be our main sales channel as we reach +1500 users from Europe, North America and Asia. This situation will be reached by focused marketing campaigns and active high quality sales work.
Based on the sales work experience in domestic market, the best way to sell the service is presenting it in person. When the service is ready it will be marketed directly to the primary users and they can be allowed to test the service for free for example 1 week.
It doesn’t make sense for EPECC to start building an international sales organization. Maybe not even local offices for all different markets. The sales in new markets will be done the same way as it has been done in Finland, only by local partners that have already existing customer base in target groups. Ideal partner is someone that has successfully sold software to the market, that already has a wide customer network and that would get significant economical benefit from successful sales work. Markets will be shared with these partners in a way that the partner sharing its customers will get 30% commission from all sales on that market. Thus it is a win win situation and both parties benefit from fast and wide sales.
The calculation algorithm the service uses works the same way in all different markets. The data it uses (for example the amount of CO2 emissions produced when a cubic meter of concrete is produced or production distribution of district heating system) has to be localized to get reliable results locally. For this data collection work EPECC will use students of respected local universities. Also the building library has to be localized, language has to be translated and some local specifications (for example the legislation) have to be taken into account. For this collection work the University will get the Finnish version for free and also a significant discount from the purchase of the final localized version. This university will be used as a reference when selling to that market.
When the data collectors and the schedule for the work is defined, local cleantech companies shall be contacted to be featured in the service. The building library (if the example buildings of the Finnish version cannot be used) will be collected from local architects, house factories and construction companies as has been done in Finland as well. This is followed by listing target reference customers in partners’ network in all major customer groups. These customers will be contacted and told that testing our service is highly appreciated and that they will benefit moneywise if they make an early purchase. When there is a sufficient reference customer base, focused and visible marketing campaign directed to all major customer groups will be executed and fast customer discount is being offered.
Why invest in us?
We have made dozens of climate impact analyses in Finnish municipalities and cities. We know how the environmental impacts have to be calculated. Our current key personnel and people in the background hold strong knowledge on both sales and digital services.
- Own idea, learning by mistakes and persistency
The original idea is our own. It has evolved to its current form by learning from mistakes, by new inspirations during the journey and by listening to the customers. We have invested lots of our own resources into the service.
We are not afraid of sales work, but appreciate and love it. We believe in the phrase “Even if the sales department is not the whole company, the whole company sure should be the sales department!”
- Unique chance
By the scalability of our main product and by our business model we have a possibility to reach very high profits. Our sales and growth targets are more precisely defined in the attachment (ATTACHMENT 3. Sales and growth - document only in Finnish).
The Ecocity team is formed by an experienced and devoted group of five. They have experience in building businesses, product development and naturally from environmental work.
The scientific authority/the back restProfessor, PhD (tech.) Eero Paloheimo has as his lifework been thinking, how the planet could by the use of modern technology be saved from the threatening ecocatastrophy. He has written many groundbreaking books and writings on the subject, served as a MP and established the first parliamentary committee for the future in the world in the Finnish parliament. He was the first chairman of that committee. In his major work “The way towards new Europe” he has as a pioneer described in details the idea of a modern ecocity that maximizes the use of technology. Eero’s persistent work with the theory of an ecocity gives us the scientific back rest we need. https://cn.linkedin.com/in/eero-paloheimo-569a141a
Primus motorPekka Paloheimo is a sales professional. He has gone through the “foreign legion of sales” in the timeshare industry and was nominated at only the age of 25 to be the Sales director of the biggest Scandinavian Timeshare company called the Holiday Club Finland. When working as a consultant in Mercuri International Ltd. he was nominated (based on his sales and training results) a Senior consultant faster than anyone before in the 30 years history of the company. “I’ve had the privilege to see quite much of the world already as a child. Later on as an adult I’ve continued exploring it. Now as I am a father of 2 year old Sebastian, I see the future of our planet to be even more important. In my opinion, the key to this whole question is to realize that economy and the environment should not be seen as counterforces. As authorities start directing things to the right direction it becomes economically preferable for both individuals and companies to start acting in the most environmentally friendly way. This is the direction we are heading and that is the only right one. Also the fundamental purpose of our company is to help the planet and our success in that can be measured by the financial success we achieve. Same goes for myself. In my current position I can use my sales and business skills in something ethical. Additionally to that we can help others to succeed as well; cities, designers, cleantech companies and through our crowdfunding project now individual retail investors as well. As an adventurer I have the same feeling as I’ve had in the beginning of my adventures: long preparations are over and the journey can begin. I couldn’t imagine a job that would have a greater meaning for myself. Important can also be fun!” https://fi.linkedin.com/in/pekka-paloheimo-3ab07a23
Problem solverAleksi Heikkilä is a young environmental specialist. For Aleksi the key factors in his success in work have been his Masters degree in Environmental engineering, his knowledge in modeling and his experience in municipal engineering and urban planning. In EPECC Aleksi is responsible for the functionality of the calculation algorithm, which requires accuracy and skills in problem solving. ”My interest in nature and the environment started during my first hiking trips with my father when I was just 10 years old. Concern about the state of our planet led me to study environmental issues. Later on the interesting and challenging work on the subject has kept me focused. Like our CEO, I also believe that environmental actions have to be economically profitable as well, so that the change towards better is possible. I want to be involved in showing the example of how our success will benefit the environment as well.” https://fi.linkedin.com/in/aleksi-heikkil%C3%A4-a13244a4
The guardian of knowledgeKatri Leino is a M.Sc.(Tech.) in environmental engineering. In EPECC Katri is responsible for carbon footprint calculation and the modelling principals of climate impact analysis and collecting the data. Katri’s specialities are life cycle analysis, resource efficiency and recycling. Previously she has worked with environmental issues in energy production and industry and in geotechnical design company. ”For me it is important that my job has a meaning. That is why I am happy that I am working exactly in this company. Here I’ve learned about ecological urban planning and the significance of it. I think it’s great and interesting to use my technological knowhow to carbon footprint calculations and to our software’s modelling principals. As an environmental engineer I strongly believe, that the solution to our environmental problems is in the continuously developing technology. My favorite way to spend my free time is travelling and naturally I acknowledge the environmental impacts of that as well. Also because of that I wish to work to ensure that the future generations will have the same possibilities and privileges of travelling and experiencing the world like I have had.” https://fi.linkedin.com/in/katri-leino-b742b789
Product developerPetri Kotro is an active board member and partner and thus takes part in the product development as well. He is an interface designer, information designer and software developer who started his career studying architecture, which is designing physical environments. Petri has along with interface designing published also scientific articles on how to perceive information. He is at his best in managing agile product development, when the objective is to create something extraordinary or a product that doesn’t have previous prototypes. ”My ecological awakening happened already as a young architecture student. I feel that the planet is my home. It is important for me that in everything I do, also in software development, I can feel that I am doing something to contribute to the wellbeing of the planet.” https://fi.linkedin.com/in/petrikotro
Investor and advisorTero Ojanperä is Vision+’s Co-founder and Managing Partner. Tero has a strong and versatile 20+ year long experience in mobile industry; he has focused on stimulating innovations, developer activities and building new businesses for most of his professional life. “We strongly believe that digitalization will significantly cut the expenses in the public sector during the upcoming years. This is expected in urban planning as well. What is genious about the Ecocity Evaluator is that additionally to it’s most current primary use it can serve cleantech companies as a marketing channel and universities in education purposes. This multiplies the market potential as well as the amount of crowdsourcing available. And also, as the service will generate more value to itself as it accumulates unique information all the time, it can be described as a good investment for us. We are looking for fast and significant growth in the share value.” https://fi.linkedin.com/in/teroo
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The biggest external risk is that a direct competitor with an equivalent product and with huge marketing resources would appear from somewhere. In the worst case scenario the product would be developed by some NGO and would be free for users. Our opinion is that without the possibility of economical profitability it is not likely that anyone could create a functioning service.
Currently the service doesn’t have direct competitors, but as soon as our sales open in the web, someone could shortly realize its potential. At that point, if all the exit offers will be turned down, it is possible that someone will create competitor with sufficient resources rapidly.
The calculation algorithm that works behind the service cannot be patented. Even if the actual algorithm will not be revealed to users nor anyone else, we have to prepare ourselves to open up some precise questions about the calculations. Experts can quite easily and shortly figure out how different calculations have been made. Additionally, as the data the service uses is open, it is basically possible to copy the service. To develop a better one is not anyhow easy, quick or cheap. The strongest wall against competition is the information the service starts to gather since day 1. It cannot be stolen and it doesn’t exist anywhere else.
According to the growth expectations the development of the markets is also a risk. This means that it is possible that the climate impact evaluations of urban plans are not or will not be necessary nor interesting in certain markets in the future. In so called aware markets like Finland and Scandinavia the subject is very current, but this is not necessarily the case in some other markets. If nations for example take the Paris climate treat lightly, will neither municipalities nor design companies start to evaluate the emissions of their urban plans.
Our biggest internal risk concerns Pekka Paloheimo’s role and his irreplaceability in the company and the development project in the short term. This risk gets smaller by the success of the next years. The board and management can be strengthened by leadership, sales and technical development professionals. Also all the programming work that until now has been subcontracted by outsiders will be in the future done by own employees. Strengthening the personnel, managing the risks and improving the economy of the company will all be essential targets of upcoming years.
Note. The company has some registered payment defaults. The basic reason for these is that we’ve operated with a very small budget and also because of the development work, the cash flow has been minimal from time to time. When we’ve run to liquidity problems we have tried to make payment agreements with our creditors, but unfortunately we’ve still been late with some of the payments. However, all of the defaults have been paid.