Skip the trip to Japan! Hungarians are working on the Airbnb of industrial testing

The Hungarian start-up, LabShare, utilizes sharing economy to connect demand and supply in the testing industry. Founded last November, the company promises a good business opportunity and the establishment of a professional community. Industry experts from Europe to China and India speak appreciatively of the digital platform connecting laboratories with testers.

Conformity assessment, known as testing, is an indispensable part of innovation. SME's and even large manufacturing and engineering companies are often unable to test their new products in-house and outsource to external testing laboratories. Since November 2020, a Hungarian company has been helping these parties find each other.

The founders of LabShare got to know one another on the client-side of the testing industry: they worked in large corporations' test departments, where they often confronted with the market's imperfections. This is how Levente Bakos, the CEO of LabShare, gained several personal experiences.

A notable example was when a German partner laboratory refused to organize a test, despite their well-established relationship with the corporation. Eventually, the test was carried out in Japan, multiplying the price and physical distance: the Japanese charged 60,000 euros for a service that the Germans would have provided for 20,000.

Bakos Levente, CEO of Labshare.

The era of "thinking big."

To enter households and become part of our daily lives, innovations need to be thoroughly tested, for which a particular market has been established within the industry.

At the dawn of the testing industry, the best deals were acquired by those with the best assets and the highest international expansion level. Thus, market players embarked on frantic investments and developments to establish as many locations and capacities as possible. Apart from securing their developments, they aimed to attract new business by building even more significant and more extensive lab capacities than their competitors.

This crazy pace eventually led to unused test parks. This underutilization's primary cause is poorly disseminated information: test equipment worth millions of euros are left unused, while elsewhere, a Bosch-sized company has to wait in line for months to access adequate capacity. If a well-established partner becomes inaccessible, market knowledge is seldom sufficient to help customers find the proper collaboration. Google doesn't help here either: the search engine does not offer useful results for the testing industry's specific needs.

Efficiency over ownership

It was a radio interview that gave Levente and his partners the final push to establish their own company. Listening to the CEO of Parkl, a Hungarian company dealing with smart parking and e-mobility, he realized that their difficulties could also be remedied through sharing economy.

Levente and his peers recognized that instead of increasing capacity, the solution is to make the already existing supply and demand meet. It is no longer possible to gain ground on the test market by investing in new assets. Instead, the market will be dominated by those who earn customers' trust by providing consistently good quality and reliable service.

LabShare often refers to itself as the Airbnb of test labs: they connect laboratories and testers on a reliable and user-friendly platform.

Angel investors have been recruited from their network: his partners see Levente as a young and ambitious, reliable, and responsible colleague in the corporate environment.

Angel investor Zoltán Karászi has fond memories of the first 1,5 years of their work together, which saw a team of dedicated founders developing new procedures. According to him, a playful, experimental approach has persisted since LabShare's launch in November 2020, while Levente has evolved into a determined leader, capable of motivating his co-workers.

Skip the trip to Japan

Behind the Labshare platform lies a well-compiled lab database. To be displayed on the platform, labs have to be pre-evaluated, certifying which tests they can perform. In addition to the pre-qualification, Labshare can provide the customer with a detailed overview of a laboratory's quality of service.

First, an automated evaluation process categorizes the newly added labs. After a few transactions, this is replaced by market evaluation. A personal recommendations system provides an accurate overview of the testers' experience with a particular laboratory, allowing them to rate labs by quality, communication, technical competence, and time management.

LabShare connects supply and demand, but the testing itself is conducted by laboratories. Labs can choose between a sales commission or an annual subscription, which currently provides the company's primary revenue.

In addition to market improvement, LabShare is working on the sustainability of the testing industry. The use of sharing economy provides an opportunity for local partners to connect to no longer have to fly something to Japan that can equally be tested in Europe. Should this method become popular, the ecological footprint of shipping and the number of new investments may decrease, and the focus may shift to the optimization of existing capacities.

It’s time to make industrial testing sustainable.

Helped by the pandemic

The pandemic made it easier to build a network behind the database: LabShare's team did not have to travel to expensive conferences; they could present themselves at online fairs from their office desk. Under the current circumstances, even the ordinarily overbooked laboratories paid attention to their concept. Due to the automotive industry's recession, several labs struggled with vacancies despite usually being fully booked.

The platform currently links labs to manufacturers of the automotive, consumer electronics, and medical devices industries. According to Levente, testing is similar for all products, and thus, LabShare can expand to other sectors in the future. In the long run, there are no obstacles to geographical growth either. As Levente puts it:

"The validation system we employ is based on physics, and the laws of physics are the same everywhere on this planet. Despite the great geographical distances, there is a relatively close connection between the markets".

The company is currently present in Europe, China, and India. As Norton Yuen, the CEO of ECTest, a Hong Kong-based partner company, puts it: "the arrival of LabShare bridges a long-existing gap between labs and testers."

Partly due to the world's highest rental costs, lab capacities were already organically shared in Hong Kong. The emergence of LabShare and a digital system helped to organize these previously scattered industry players.

Mahesh Dave, the CEO of Tubrotics, an Indian partner company, spoke about the solution with similar appreciation: 150 well-equipped labs in India fail to reach customers due to the lack of money, contacts, and advertisement. These chaotic conditions are well-expressed by Mahesh's words: "No one knows what they are doing." In his view, LabShare's solution will provide new meaning to this system of unused devices and incomplete communication.

In addition to the expansion, the team is also thinking about developing its business model and securing new revenue sources. An English and German expert base established around them can also assist laboratories in designing validation tests, evaluating test results, and dealing with any problems.

Furthermore, LabShare will expand its services to labs by featuring engineering consulting firms on the platform. Many believe in the popularity of this idea, from which they expect advertising revenue soon. They are also looking for a new investor: an extension of their current seed capital of 63 million HUF (220,000 Euros) is also being negotiated with several venture capital funds and a global professional investor.

Photos: Sebestyén László

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