SEC Technologies
The Slovak-based company SEC Technologies develops and manufactures high end stand-off detectors of airborne chemical and biological agents. Based on over 30 years of research and development, its Falcon 4G detector is the only device in the world operating on the principle of active detection. Thanks to its own unique laser technology, the device is able to detect, identify and quantify chemical concentrations with up to 30 times higher sensitivity than passive detectors, up to a distance of 6 km.
The company’s Falcon devices were used in the Iraq War, moreover, the defense forces of Slovakia, Hungary and now also US armed forces are equipped with these detectors. In the defense industry alone, the company registers a potential sales pipeline of more than EUR 280 million worldwide.
- Unique proprietary laser technology
- Background of 30 years of development and testing with military forces globally
- The only detector in the world with active detection, undetectable and eye-safe laser up to a distance of 6 km
- 30x better sensitivity than conventional passive detectors
- Low weight and high mobility - used by reconnaissance units as stand-alone equipment or integrated with land, water and aerial vehicles
- Ability to detect substances such as ammonia or harmful PM10 particles - opportunity for various industrial and environmental protection applications
- Estimated total market volume of defense market CBRN[1] at EUR 13.7 billion up to 2029[2] - detection represents a significant part of the market
- Sales pipeline of EUR 280 million with the world's leading armed forces
[1] CBRN = Chemical, biological, radiological and nuclear
[2] source: https://www.visiongain.com/report/chemical-biological-radiological-nuclear-cbrn-defence-market-report-2019-2029/ ; https://www.visiongain.com/industries/defence/
Aim of the Investment:
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History
The history of the company dates back to the 1980s, when a top scientific team in Liptovský Mikuláš began to develop laser technology and in 1993 started work on an active detector of chemical and biological substances for use by the Slovak Armed Forces. In 2015, the scientific team was complemented by a professional management team, namely Michal Šimko (formerly at McKinsey) and Martin Vaľovský (investor in Sli.do) and leveraging years of business experience, they laid the foundations of today’s SEC Technologies. In 2019, as a part of the team's professionalization, Viktor Prímus became the CFO (former CFO of Veolia Slovakia) and took over the company's financial management. Viliam Sameliak (co-founder of Sygic) will oversee the company's operations as COO.
The result of more than 30 years of development is the active stand-off detector Falcon 4G, which can detect the presence of harmful chemical and biological substances in the air with high reliability up to a distance of 6 km. The device is based on the principle of active scanning by differential absorption of laser radiation. DIAL technology works with two CO2 lasers of different wavelengths that illuminate (in a given light spectrum) a gaseous substance. Because of their physical properties, substances have different infrared radiation (IR) absorption rates. The integrated spectrometer measures how much IR radiation the substance has absorbed and collects data in time sequence. Based on this data, internal software evaluates the substance and its exact distance and concentration.
Falcon 4G
Falcon 4G thus replaces the current solution of passive stand-off detectors with very limited functionality and contact detectors, whose measurement is conditioned by immediate proximity to the target substance.
The detectors were used in the Iraq War, the Armed Forces of the Slovak Republic are equipped with the devices, Hungary owns 4 devices and 1 device was purchased by the US Army. Currently, the company has won a tender for 4 pieces for one South American army and the detector will be further tested by the Japanese, Turkish and Spanish armed forces in the first quarter of 2020.
Thanks to its size and low weight (28 kg only), it offers relatively high mobility and the possibility of integration with land, water and aerial vehicles. It can be used not only in chemical and ground army units, but also in government security and rescue units and in heavy industry. In one Asian country, SEC Technologies has won a tender to equip coastal patrols.
Business model
Currently, the company registers a potential sales pipeline of over EUR 280 million in the defense sector alone. With the growing global threat of biological and chemical weapons, the company expects increased demand for its solutions.
The business model is characterized by a long sales and production cycle (18 to 48 months; working capital intensive), however, with the scaling of production, there is potential for substantial gross margin growth. The estimated size of the CBRN defense market over the next ten years is EUR 13.7 billion, of which a significant part is directly related to the detection of chemical and biological substances.
From a human resources point of view, the company's biggest challenge is to establish an independent production team. Production is now realized by the device’s lead R&D team and inventors, which significantly diverts their capacity from further product development. SEC's internal team is currently mapping the complete production process and one of the investment goals is to set up a separate and scalable production team, enabling key technical staff to focus primarily on research and development.
In addition to setting up independent production and strengthening research and development, the company also plans to focus on expanding its sales team to cover potential customers globally and convert the sales pipeline into binding orders as effectively as possible.