Joachim Kuhn (right) and Roland Caps in a va-Q-tec container. Together they founded va-Q-tec in 2001 in Würzburg. © va-Q-tec

va-Q-tec: "Entrepreneurs must be more resolute than the problems they encounter."

Imagine, you have a brilliant product idea with tangible benefits for the customer, you've put in years of research, founded and launched a company, entered the market - and suddenly, your first three clients go bankrupt. We spoke to Dr. Joachim Kuhn about how to deal with these kinds of challenges as a founder and how to transition from university to the stock market. As 'Entrepreneur of the Year 2019', Kuhn heads va-Q-tec AG, which has been registered in Frankfurt since 2016.

Back in 2001, Joachim Kuhn and Roland Caps founded the company as a spin-off from the Bavarian Center for Applied Energy Research (ZAE), which is affiliated with the University of Würzburg. Currently, va-Q-tec is the global market and technology leader for vacuum insulation panels, specializing in perfect insulation solutions used in refrigerators, pipes and hot water tanks. To carry out controlled, temperature-sensitive logistics chains, the company also operates a fleet of several tens of thousands of rental containers and boxes in a global partner network, with which temperature chains can be ensured in areas such as healthcare logistics. The high-tech thermal containers and boxes are manufactured in Germany and are currently an essential part of the international logistics of temperature-sensitive COVID-19 diagnostic kits, medications and vaccines.

Mr Kuhn, can you tell us what the biggest challenges were at the beginning of your career when you founded va-Q-tec with Roland Caps in 2001?

The biggest challenges we faced were establishing the team, market entry and financing. In the beginning we approached the foundation without much concern, still we had a lot of drive because we saw a need for the solution we had come up with. It was a good thing that we didn't know about all the technical and business challenges at that time, because knowing that we might not have approached the spin-off. Entrepreneurs must be more resolute than the problems they encounter.

When you founded the company, there was no business incubator in Würzburg yet. How would you evaluate the development of the support network for founders in Bavaria in recent years?

From our perspective, Bavaria already has a very solid and powerful support network for founders. That said, we believe there is still quite a lack of sufficient financing for the early stages (seed capital) as well as support for marketing and business development. The Business Plan Competition in Northern Bavaria brought us into the world of financing at that time, where we were able to gain a lot of experience. We have always turned to our surrounding area for advice and support, including our investors. They see hundreds of companies, and amassed a great deal of knowledge.

"To establish a company like va-Q-tec you need the right people in the right place. It needs to fit personally as well as professionally".

How was your team set up at that time?

At the time of the first round of financing, there were three of us in the company. From the very beginning, the founding team included a person responsible for production, a person responsible for development, and I was responsible for general management, marketing and sales. Everyone had a basic understanding of everything however, there weren't any research nerds in the company. We then recruited the first team members through job advertisements. To establish a company like va-Q-tec you need the right people in the right place. It needs to fit personally as well as professionally. When starting a new company there will be challenges that you have to be able to handle on a more personal level as well.

How did you manage to transition from a research environment to the business world?

Our founding team originated in a university environment, but through ZAE we always had contact with the market, namely applied research. To generate enough sales at the right price, you need a little bit of luck for the first projects, and we were fortunate to achieve this at the beginning. We started off with sales and customers from the outset. But shortly after our launch, our first three clients went bankrupt, which definitely wasn't the best start.

How did you deal with that?

The thermobox topic had always been a main focus for va-Q-tec from the very beginning. We knew that there was a demand for it on the market, but we'd approached it from the wrong angle at first. It took us two years to realize that although our solution was much better than competitive products on the market, it was also much more expensive. It was the needs of the then up-and-coming biotech industry in 2002-2003 which saved us and allowed us to grow.

"But shortly after our launch, our first three clients went bankrupt, which definitely wasn't the best start".

Changing your business model a few years after the company was founded pushed you from being a regional company into the international league. How did that happen?

We started out developing and marketing our innovative vacuum super insulation panels (VIPs) in 2001. VIPs are very thin, high-performance insulation panels with core materials sealed with special high-barrier films in a vacuum. VIPs are intended for especially compact and energy-efficient insulation, because they insulate 10 times better than Styrofoam, for instance. Later on, we added phase transition materials (PCMs), used for storing both hot and cold materials.

We learnt early on in the company's development that our customers not only wanted to buy these materials, they also wanted us to supply them with ready-made thermal packaging systems. With a highly efficient combination of VIPs and PCMs, we developed and marketed passive thermal packaging systems, containers and boxes that can maintain constant temperatures of minus 20 degrees Celsius for 200 hours or more without the need for external energy.

In many cases however, the clients didn't want to own these thermo-boxes and containers themselves, but rather were primarily interested in ensuring the temperature-stable transport of their valuable cargo. So in 2011 we started out with a fleet of self-produced rental containers, with which temperature-sensitive logistics chains, such as in the healthcare sector, could be handled cost-effectively and energy-efficiently. This became our strongest division to date.

"We anticipate additional demand as a result of the Corona crisis in the mid-term"

What do you think of the current situation and the potential for further development?

The current situation is generally leading to an increased awareness of the need for secure global temperature-controlled supply chains in the healthcare sector. This isn't a temporary phenomenon but will create additional dynamics in the industry. We anticipate additional demand as a result of the Corona crisis in the mid-term; in particular from the pharmaceutical industry, with which we currently generate around three quarters of our revenue. Currently, more than half of the corona diagnostic kits shipped internationally are transported in va-Q-tec boxes and containers. One of va-Q-tec's largest customers is also reporting promising results in experimental tests of a treatment for COVID-19. (External link)