Startup of the Day: Finnish forestry platform CollectiveCrunch
Founded in 2016 by Christof Danzl, Jarkko Lipponen, and Rolf Schmitz, CollectiveCrunch develops an AI-powered platform that enables sustainable forestry by utilizing datasets on climate, geo, and customer process and providing up-to-date data on forests and carbon stocks.
CollectiveCrunch has a team of about 20, mostly based in Espoo, plus a small office in Berlin. Today, the company serves 7 of the Nordic / Baltic top 10s — these are companies like the Finnish and Swedish State Forests, Stora Enso, and Metsä Group. Recently, AI-based forestry platform has secured €1.4 million in fresh funding to fuel international expansion led by Nidoco AB.
In the Startup of the Day column, co-founders of CollectiveCrunch Rolf Schmitz, Christof Danzl, Jarkko Lipponen share more details about the startup’s idea, its product, and future plans.
“The Startup of the Day column on AIN.Capital is dedicated to tech projects from all sectors that originated from the CEE countries. If you would like to introduce your project, please fill in the questionnaire.”
Tell us about your startup. How does it work?
We develop AI-based solutions for sustainable forestry and the forest carbon market. In a field where updates are done manually and only every 5–10 years, we provide near-real-time insights, at the click of a button, at a fraction of the cost.
How did you come up with the startup’s idea? What was the reason/motivation behind it?
We started with the idea of bringing climate data to business processes. We thought that was really important and worth digging into. Likewise, we did some work in logistics and have a small side-line in energy, predicting wind energy provided by wind farms. And then Jarkko spoke to family who own forests and were frustrated with the lack of transparency.
How long did it take to reach the prototype or MVP? What did you encounter?
We took about 2 years to get from the basic idea via AI modelling and customer feedback to an MVP. We’re modelling nature, so the core challenge was: can we develop AI-based models, using satellite and ground-truth data to build a solution that gives our customers value. The accuracy of the models was what allowed us to move from the MVP to commercialization.
We are modelling nature, which is complex and diverse. There was a lot of skepticism at the time that this was doable. In April 2019, in the run-up to the MVP delivery to the customer, our Data Science Lead at the time got so stressed out that he thought it was not doable. So, we pulled through and got the job done.
In terms of commercialization, a key challenge was that we were developing a product, where the industry had so far used consulting projects to solve their problems. So, we were also disrupting the prevailing business model.
When exactly did you launch your product? Or when the launch is planned?
What we do at core are forest inventories, which answer the question: How many trees of what species and size / maturity are in a given forest area? The product is Called Linda Forest and launched in September 2019 in Finland. Since then, we expanded the product geographically and are today operational on three continents. Moreover, we kept adding features.
An important recent addition that is currently in beta is a bark beetle risk prediction. Bark beetles are destroying European and North American forests at an unprecedented scale, driven by climate change. Most current approaches detect the bark beetle damage when it is basically too late and the out brake has happened. We are aiming to predict outbreaks, thereby giving our customers an opportunity to be proactive.
More broadly, such services are called forest monitoring, and we see tremendous opportunity in adding features here.
Another big opportunity is to measure carbon sequestered in forests and to track their biodiversity. We’re looking to launch this product, called Linda Planet, in the next few weeks.
Tell us about the stratup’s business model. How do you monetize your product?
We model a given area of forest, for example owned by a large forestry firm. The customer pays an annual SaaS-style fee to receive forest inventories and additional features such as monitoring based on the area we cover.
What are your target markets and consumers?
We are a B2B firm and today service large forest owners. The Nordics are the most advanced region in our field of forestry digitalization. Today we serve 7 of the Nordic / Baltic Top 10s. These are companies like the Finnish and Swedish State Forests, Stora Enso and Metsä Group. We have expanded to Spain where ENCE is a customer, and we have recently signed our first deals in North and South America.
The next frontier for us are the carbon and biodiversity markets. There is a lot of money flowing into these, but a lack of transparency results in a lot of Green-washing. We have the solution to bring transparency to these markets.
If the startup has already launched the product, what are the results: metrics, income, or any clear indicators that can be evaluated.
We are targeting product sales and recurring revenue. So, we keep a close eye on that metric growing, which it has done nicely for the past 3–4 years. We have some non-recurring revenue, which can help tactically, but which we’re not strategically targeting.
We are operating today on 3 continents. The Nordics are most advanced, but also quite small. So, another metric is our revenue outside the Finnish and Nordic markets. This we are tracking closely to make sure we address the big global opportunity.
What about your team? How many people are working in the startup? If you’re looking for new employees, indicate whom exactly.
We have a team of about 20, mostly based in Espoo, Finland, plus a small office in Berlin. We are a really nerdy company, with 80% of our people really deep and capable data engineers and data scientists.
Furthermore, we are always interested to hear from gifted and driven data scientists and data engineers. Our focus in terms of proactive hiring as we go through 2023 will be in Sales and potentially strengthening our product capabilities.
Have you already raised any investments? Provide us with more details on each funding round: the amount, investors, the purpose of the investment.
Finland and the Nordics have a wonderful ecosystem for early-stage startups. There is a vibrant community of angel investors that support firms like ours. We did a few very small pre-seed rounds supported by this community. In 2021 and now we’ve done two bigger rounds supported by Nidoco AB and Thominvest, professional investors from Finland. In total, we have raised around €4.5 million in equity and about the same again from public funds such as ESA and Business Finland.
What’s next? Tell us about your future plans.
Two important things are on our roadmap for 2023:
- Expand in the USA and Canada, where we started last year. We want to grow the share from the region to 35% of our revenue by 2024.
- Capture a meaningful share of the carbon market as digitalization happens there. This is a process strongly influenced by the standard organizations, Verra and Gold Standard, which have been slow in adopting digitalization. This is really important for our own development, but even more so from the climate change perspective.