It seemed that the founders of the Brno Leitners start-up, Rostislav Slovák and Marek Šmarda, had found a hole in the market and that their watches, which combined the world of mechanics and smarts, would find their customers. But now the company, which raised a total of five and a half million crowns through the Kickstarter portal, has announced bankruptcy due to financial difficulties. People who subscribed to a watch will probably never see their money again.
Last week, the co-founder of the Brno Leitners company, Rostislav Slovák, informed on the company’s website that the company had ceased operations due to financial difficulties and that an insolvency petition had been filed.
The Slovak justifies the financial problems of the company, which wanted to produce a hybrid connected watch, by the market situation. This caused delays and a multiple increase in the prices of basic materials and microchips, which led to an increase in investment.
In an open letter, he also mentions differences with his partner Marek Šmarda, with whom, according to him, he did not agree on another way of financing the project. In an interview with the iDnes.cz server on Friday, he said that Šmarda demanded unsatisfactory financial terms in his favor during negotiations with investors. Šmarda has not commented on the situation in public.
Here’s how the company founder promoted the watch in September 2020:
Leitners watch: promotional clip of September 8, 2020 | Video: Youtube / Leitners and Komerční banka
Last year, during a campaign on the US crowdfunding portal Kickstarter, entrepreneurs managed to raise almost 220,000 euros (5.4 million crowns) for the development and production of watches. The amount therefore far exceeded the amount that the company wanted to collect for the start of the project, namely 30 thousand euros (more than 730 thousand crowns).
According to the co-founder of the consulting firm Fundchaser David Friedl, the failure of projects that have raised funds through crowdfunding platforms is not very rare. According to him, all over the world it is a unit of percentage. According to Friedl, however, a project that has raised as much money as Leitners rarely fails.
Ad Maiora watch (click to see full size) | Photo: CzechInvest
“Something like this hasn’t happened often in the Czech Republic, which is interesting and surprising in my opinion. Projects that raised much less money will usually fail,” he told the online daily. Aktuálně.cz. Fundchaser specializes in crowdfunding campaigns.
Hybrid smartwatch concept
The start-up Leitners wanted to bring to market a hybrid watch that connects the world of traditional mechanics and modern smart. The device called Ad Maiora, on the one hand, had a classic self-winding machine, which provides the movement of the second hand. At the same time, however, it had to function as a smartwatch, i.e. allow connection with a phone, heart rate monitoring or, for example, listening to music.
As Hospodářské noviny wrote last year, the concept of hybrid smartwatches, which also preserve the analog time display, is by no means new. However, these devices are usually in lower price categories, use mass-produced machines and have limited functions. The Brno start-up promised an alternative to people hungry for luxury and quality.
But the promises could not be kept. The Slovak further told iDnes.cz that it was not clear until the end of last November that the company did not have enough funds to continue with the project. At that time, according to him, the long-prepared investment came to an end.
“All the previous activities were carried out according to the plan of obtaining additional investments. No one even imagined that the whole contract would turn out this way. On the contrary, so far our project has been very successful and was on the rise”, Slovak described. For example, the company exhibited at the Prague watch fair Salon Exceptional Watches in October. It has also established regional cooperation with C&K Brno, an authorized Toyota partner.
“You will never see a watch”
Server iDnes.cz wrote that around this time, however, the company withdrew additional money from the Kickstarter platform due to complaints from subscribers. The Slovak says the company has not accepted any new orders since the investment halted.
“I can confirm 100% that all payments received from clients after December 1 have been or will be successfully refunded. At that time, we already knew that the future of the project was uncertain and I would act otherwise unethical and illegal if I continued to collect advances,” he said.
He declined to say how many people in total subscribed to the product on the grounds that it was confidential. Kickstarter says the project was backed by 460 people.
The Slovak also said in an open letter that “the sad but inevitable fact is that all our customers will never receive an Ad Maiora watch, without compensation”. The company used crowdfunding money to develop watches and introduce their production. Customers now only have a chance in insolvency proceedings.
“During the insolvency process, customers can be identified as creditors. It all depends on the decision of the insolvency court and the insolvency administrator, taking into account our terms and conditions and those of Kickstarter. The management will not fulfill all the obligations of our society”, writes the Slovak.
Friedl said the vast majority of crowdfunding platforms, such as Kickstarter or Czech Hithit, warn all backers that they don’t have to get the product, or get their money back.
“That’s an important thing. Of course, the creator has to do his best to complete the project. If he doesn’t succeed, he has to let the contributors know and explain the situation to them,” Friedl explained. .