Startup of the Day: SP Tech Solutions, a Polish rail transport company

Founded in 2019 by Michal Pawlowski and Piotr Sikorski, SP Tech Solutions delivers a full range of services to rail transport firms. Its comprehensive IT system for railway transportation businesses enhances operational efficiency and execution for railway sector by optimizing transport planning, reducing operational costs, and automating processes. In March this year, SP Tech Solutions secured a nearly €3 million funding round from Vinci HiTech fund.

In the Startup of the Day column, Piotr Sikorski, co-founder of SP Tech Solutions, shares the 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 originate 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?

Our goal is to transform the operations of rail freight companies by providing solutions to all their challenges, including limited resources, inefficient processes, outdated tools, lack of adequate financial planning, and rising costs.

The three tools that make up the RAILY ecosystem address most of these companies’ issues. Together, they offer a transformative solution, individually or as a comprehensive package:

  • RAILY Taxi automates and optimizes staff transport. This may seem odd for those unfamiliar with the railway sector’s inner workings, but employee transport is a major sector’s pain point that generates enormous costs. Train drivers and other crew members have to commute hundreds of kilometres to and from their job location, and for safety reasons, they require drivers. Rail traffic dispatchers spend loads of time finding the service to transport the employees.
  • RAILY Cargo, a TMS/ERP tool that integrates all logistic planning, rolling stock management, trade, and HR processes into a single system, effectively streamlining operations. Many freight rail transport companies have expressed the need for such a solution because the available tools are often outdated, slow, and inefficient. Younger employees, in particular, have higher expectations and frequently complain about the sluggish processes of existing systems. They want solutions that can transform and modernize railway operations.
  • RAILY Marketplace, a platform that connects service providers with rail companies for all their needs, from technical maintenance to crew hiring. For example, the previously manual process of hiring a locomotive driver is now fully digitized, allowing companies to work with unlimited service providers and maintain transparency around costs.

How did you come up with the startup’s idea? What was the reason/motivation behind it?

My co-founder, Michał, has a strong connection to the railway industry, stemming from his family’s deep-rooted traditions. His father, uncle, and grandfather all worked in the railway sector, which nurtured his passion for the field and equipped him with invaluable insider knowledge.

We first met during our studies in 2010. Eight years later, we collaborated on a project to develop a railway simulator for training train drivers.

A few years later, we teamed up again to launch SP Tech Solutions, starting with our first product, the RAILY Taxi tool. That was the beginning of our journey, and everything took off from there.

How long did it take to reach the prototype or MVP? What did you encounter?

It took us 1 year to develop the first version of our prototype or MVP, which we then delivered to our client and continued to refine. Our company was founded a few months before the pandemic, significantly impacting our product development. However, the biggest challenge we faced was our perfectionism. We kept postponing the implementation because we wanted everything to be perfect.

The COVID-19 pandemic and financial constraints eventually forced us to launch the product, even though it wasn’t perfect. In the end, we learned that done is better than perfect. It was a precious lesson to us, but perfectionism still occasionally creeps in.

When exactly did you launch your product? Or when the launch is planned?

At the end of 2021 we launched the first commercial version of RAILY Taxi.

Tell us about the startup’s business model. How do you monetize your product?

All our products are designed as SaaS solutions, ensuring scalability and robust performance within the Google Cloud environment. Depending on the product and features, we offer various pricing models, including commission-based and fixed-fee structures.

What are your target markets and consumers?

We target rail freight companies and their service suppliers operating in international markets. Our cutting-edge and comprehensive solutions offer unmatched value to the railway industry. The RAILY suite improves management and processes and increases control of virtually every aspect of rail freight companies’ functioning, resulting in cost reductions, savings, and, ultimately, higher net revenue.

When it comes to freight railway staff transportation, we’ve already secured a significant market share, nearing 30 (Polish). Our goal is to reach 50-60% before we hit the ceiling. We’ve been fortunate to collaborate with major companies such as PKP Cargo, Lotos Kolej, Olavion, Freightliner (part of Genesee and Wyoming Inc.), and Rail Polska (part of Rail World), which speaks to their trust and confidence in our solutions.

Our current focus is on two key priorities: product development and international expansion. With the recently raised funding, we can support our expansion efforts in the German market. We see immense potential in the German market for adopting our tools, particularly the RAILY Marketplace. This platform is designed to streamline searching and ordering various rail services, such as train technical inspection or hiring a locomotive driver. It allows companies to quickly find exemplary service and compare prices from trusted partners, making operations more efficient. This game-changer replaces the need for phone calls and other manual, time-consuming tasks with a single tool that provides all the necessary data and functionalities,

It’s worth noting that in Germany, about 50% of railway employees work on an outsourcing basis, representing a significant market opportunity for RAILY Marketplace.

If the startup has already launched the product, what are the results: metrics, income, or any clear indicators that can be evaluated.

Companies such as PKP Cargo, Lotos Kolej, and Laude Smart Intermodal already use our solutions. It is worth mentioning that our clients have around 50% rail freight market share. The real market need for our solutions is evidenced by the 1000% increase in our Group’s revenue over the past two years, reaching nearly 41 million PLN in 2023.

What about your team? How many people are working in the startup? If you’re looking for new employees, indicate whom exactly.

By the end of 2023, our team consisted of about 60 people. Today, we have expanded to almost 90 team members and plan to hire an additional 10 employees by the end of this year. Our primary focus is recruiting specialists in sales and IT, as these roles are crucial for achieving our scaling and expansion goals.

In addition, through our RAILY Taxi tool, we collaborate with over 1100 drivers. These drivers cover millions of kilometres each month, providing exceptional service to our clients.

Have you already raised any investments? Provide us with more details on each funding round: the amount, investors, the purpose of the investment.

Since launching, we have raised 19 million PLN. Initially, we secured 7 million PLN from the SpeedUp Bridge Alfa fund, Pomerangels, business angels, and individual investors.

More recently, we obtained an additional 12 million PLN from the Vinci HiTech fund, managed by Vinci S.A. product development, sales, expansion in international market.

What’s next? Tell us about your future plans.

We are focused on boosting sales and strengthening our position in Poland while expanding internationally. As mentioned, our strategic target for this year is the German market, and we plan to concentrate primarily on this region.

Looking ahead, we are also considering expanding into the entire DACH region, the Czech Republic, France, and Italy. Additionally, countries like Brazil, Mexico, and India are within our scope of ambitions. Our preliminary analyses confirm that all these locations are in demand for the tools our RAILY ecosystem offers.