The COVID-19 pandemic taught the world how to work from home, but Russia’s war in Ukraine has taught the employees at Delfast, a Ukrainian e-bike startup, how to work from bomb shelters, while on the move and under threat of violence.
The usual priorities of a startup – securing venture funding, researching and developing new products, finding product-market fit – haven’t exactly been put on hold, but they are now much lower on Delfast’s to-do list. Since Russian troops invaded Ukraine in late February, Delfast’s top priority has been to see its Ukrainian team of 30 safely evacuated from the most dangerous parts of the country.
When not focusing on sales, marketing, R&D and customer support, Delfast’s smaller team of seven employees based in Los Angeles has been pleading with U.S. politicians and the European Commission to supply Ukraine with anti-aircraft missiles and fighter jets that could help Ukraine gain back some control over its air space, and, hopefully, put a stop to this war.
Delfast’s co-founders, Daniel Tonkopi and Serhiy Denysenko, say they have always believed in safeguarding the future. When they founded Delfast in 2014, originally as a delivery company, Tonkopi and Denysenko knew that providing couriers with green transportation options would be critical to the company’s operations.
The most important thing for an entrepreneur, and in general for any leader, is to protect the team and be completely honest with them during a tough time. Daniel Tonkopi, co-founder of Delfast
The founders soon realized that a bike with the power, range and battery life their couriers needed didn’t exist, and so they set out to build one. In 2017, backed by a Kickstarter campaign that saw the company raise $165,000, the startup began manufacturing a bike to fit its needs – one that promptly won the Guinness Book of World Records for the greatest distance traveled on an electric motorbike on a single charge.
We spoke with Delfast’s co-founders to discuss what it’s like running a startup during a war, how the startup is considering breaking into new business verticals, and the importance of always having a Plan B.
The following interview, part of an ongoing series with founders who are building transportation companies, has been edited for length and clarity.
Note: Serhiy Denysenko’s answers were translated from Ukrainian by a member of Delfast’s team for TechCrunch.
TC: Serhiy, you’re on the ground in Kyiv. What’s your day-to-day like?
Denysenko: Every morning starts with a check-in on Slack with all the colleagues. It’s important to keep in touch and know that everyone is fine, or as fine as is possible right now.
Besides my work as a COO, I’ve been helping with volunteering, getting supplies and medicine to people, and this is something that pretty much every Ukrainian is now doing. I had my family relocated to Hungary, so I feel more or less safe, and I’m just trying to work as much as possible and do my best in every possible area, whether that’s supporting the company or supporting Ukraine in general.
How are you managing your team through this crisis? What’s changed?
Denysenko: We got used to working remotely during Coronavirus times, so we have our task tracker, where everyone can see his or her task. Every Monday, we have an online Zoom meeting. Previously we only had these meetings at the executive level, but now during the war, we are gathering all together, just to see each other’s faces and ask how they’re doing, how’s everyone feeling. Just to talk with everybody.
Has the war affected your manufacturing or delivery capabilities?
Tonkopi: I hate to say it, but we were prepared for this. We develop our bikes in Ukraine, where our R&D and engineers are, and we do prototyping in Kyiv, but we produce the bikes in China and then do final assembly in Los Angeles.
So our logistics was not affected, aside from the issues with logistics that everyone in the world is having. But we have our stock here in California and we supply bikes to clients. Actually, in the last year, we decreased our delivery time from four months to just two weeks.
What do you think has been the biggest challenge so far in terms of keeping things on track given the hellscape right now?
Denysenko: Our current challenge is to relocate people from dangerous places. For example, it’s almost impossible to get someone out of Kherson, because if they go by car, they’ll be under attack by Russian troops. They just shoot the cars on the road, or bomb the city and bridges. So this is the main challenge. Every team member has families and cats and dogs. Right now, we have about 20 people that we need to move out from dangerous cities to the west of Ukraine. We’re looking for transportation, but there’s no safe way to go.
Tonkopi: Yes, the most important thing now is our people. Like one of our marketing managers is in Kharkiv, which has been bombed and almost demolished by Russian troops. Another one of our staff is in Kherson, which is fully occupied by Russians. She created a bomb shelter in her bathroom, putting pillows there and removing the mirrors so they wouldn’t be broken if bombs explode nearby.
We are doing our best to evacuate people to the safer parts of Ukraine. There are no safe places in Ukraine right now, but there are some that are relatively safe.
We all work now in two shifts. The first shift is our usual work and the second shift is our voluntary work. In Kyiv, half of our engineers are at war now. They are in the Territorial Defense Forces, which is like an official civilian army.
Here in Los Angeles, we do our best, we go to rallies, we write petitions to the U.S. Congress, and I personally created a Telegram group that helps to address senators and congress people to help Ukraine.
All other challenges that we have, to raise venture rounds, to produce vehicles, they are all way below this challenge. The first task is to win the war. And then we’ll go to the next task.
Have you lost any staff during this crisis because people just can’t emotionally handle working while there’s a war going on?
Tonkopi: It’s hard to work. Especially during the first week, everyone couldn’t believe what was going on. It was really hard psychologically. People were working from bomb shelters, like Serhiy spent maybe a week in the bomb shelter with his family. We have bomb shelters in our office center. Our chief engineer was in Kharkiv, so he had to flee.
Now, we have found a mental health specialist who is ready to help each of us. But after about one or two weeks of this nightmare, people came back to work. We cannot just be afraid all the time. It’s terrible; it’s a horrible situation, but our team has come back and put a lot of their energy into work. And you know what? During the war we developed a new model of the bike. It usually takes a year or more to create a new prototype, but we are going to do it in one month!
That’s incredible. Tell me about the new bike.
Tonkopi: We have our hardcore user bike, with a range of 200 miles and it can go up to 50 miles an hour. It’s good for all terrains, but it’s heavy; it’s big. It’s like 80 kilograms [176 pounds]. People here in the U.S. want lighter bikes. They want more affordable bikes, and they don’t need 200 miles of range or such high speeds. So we analyzed their needs and created a new model that we hope will meet their expectations. And we are going to launch it within maybe two months, by the first of June as a Kickstarter.
We have already developed the design, and now we’re in the process of creating the prototype, which we will present by the end of May. Because of the war, we have a lot of energy and usually this takes much longer, but now we all feel as though we must act. Our engineers were afraid during the first week, but then they came back to work with triple the energy.
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I noticed that Delfast is donating money to Ukraine. Can you afford to be doing that?
Tonkopi: Yes, we donate 5% of our revenue to Ukrainian humanitarian organizations to help buy helmets, life vests, medicine, etc. I personally donate to the Ukrainian army. Our company policy is not to support military forces, though.
It’s 5%, because we do what we can. During our future Kickstarter campaign, we will definitely donate part of the revenue to the people of Ukraine.
You’ve raised about $4.2 million in multiple seed rounds. Do you plan to raise more venture funding any time soon?
Tonkopi: We announced a Series A venture round three months ago, and we’re hoping to raise $20 million. We had just started to sign agreements and collected hard commitments for $2 million when the war began. So there’s been a pause, but I’m starting that up again, and negotiating with investors to find the remaining $18 million.
What types of investors are you looking for in this round?
Tonkopi: We’re looking for two types of investors. The first is traditional venture firms with a focus or portfolio in hardware, clean tech or green energy.
The second type of investor would be an automobile or electric vehicle company, like General Motors, Ford, or BMW. We believe we can add value to them and combine our efforts. We have expertise in electric vehicles. We have a lot of patents and patentable technologies in our bikes. We are a high-tech engineering company – we just happen to produce bikes. But we are ready to move beyond just e-bikes.
One of our main goals is to move production to the U.S., so this goal will be part of the round. We hope to open an assembly factory here in either California or Texas, and produce e-bikes here, and also create jobs in the U.S.
What does moving beyond e-bikes look like?
Tonkopi: One important part of our bike is the onboard PC, the main computer that accumulates all the data like GPS tracking, trip history, temperatures, the battery management system, and battery usage. This computer could be used in other vehicles for fleet management, for improving battery consumption, etc. This is one example.
Another example is requests we get from other companies, like one that’s producing delivery robots. They told me they have everything needed for the upper part of the robot, like delivery, navigation, and giving orders to a customer, but they need help with the lower part of the robot – the long range, the battery management system, and the ability to have the vehicle run farther.
Obviously, the world has been increasingly unpredictable. Startups are at risk of facing multiple crises, from a global pandemic to natural disasters to, as you’re experiencing yourselves, an all-out war. Do you have any advice for founders navigating their startup during a crisis?
Tonkopi: The most important thing for an entrepreneur, and in general for any leader, is to protect the team and be completely honest with them during a tough time.
When the COVID lockdown began in March 2020, sales of Delfast e-bikes dropped to near zero. I arranged a team meeting on Zoom, and told my colleagues that we had enough money to last a month. We began to brainstorm about what we could do. One team member suggested launching an installment plan for clients, another proposed to organize a sale. And another person was thinking about launching new bike models on the market. We planned to release them throughout the year, but the question was to do it now or maybe never. All the proposals we implemented in March 2020.
In April, sales increased four times compared to before the crisis. In February, we had sold 10 bikes, and in April, we sold 40. So it gave us a good boost for all subsequent months. And most importantly, we started to believe in ourselves a lot. Later, we realized that the consolidation of the team at the right moment helped us survive as a business during the coronavirus year.
Currently, we’re helping our employees with relocation, evacuation and migration issues. We provide them with financial and psychological support. All employees have kept their jobs, and there is no talk of any dismissal or reduction in salaries. Despite the financial difficulties of the company, we’re using reserve funds, and are looking for every opportunity to save and protect our people.
During a storm, the team must understand if it is ready to follow its captain. Can they trust him with their lives? Crises come and go, but no crisis or war can be won alone. Therefore, the most vital thing that will help you win is the team.
Denysenko: A founder always has to be ready to implement Plan B. That’s why it’s crucial to have it very detailed and thought out for the worst scenario. You need to realize that crises – war, climate catastrophes, or anything else – can really happen. Even if everything is fine, having an efficient Plan B costs nothing.
These are a few points I would recommend paying attention to first and foremost while working on your Plan B:
- Relocating the team. Employees are and always will be the most valuable part of any company.
- Sufficient network of partners, so that in the worst case, you can rely on alternative supplies of necessary materials, parts, or anything else you need to continue production (or business in general).
- A financial fund to cover the needs of the company when you don’t have your usual income.
- It’s always a good idea to be prepared to develop an alternative product quickly. It may help businesses to survive the situation. Moreover, this is usually a workable way to bring the team together.
As we see now, a tough time can be a strong push for consolidation and creativity.
Where do you expect or hope to see Delfast a year from now?
Tonkopi: We will win the war, and we will celebrate the victory day. We will grow our team to even more than it is today, both in the U.S. and Ukraine. By that time, we will have raised $20 million, established our assembly plant, and have production in the U.S. We will present two new models to the market. I mentioned just one, but we have another one in the works, as well.
Denysenko: I want to see Delfast bikes to be the Tesla of e-bikes, the one everyone follows.