Sergej Lugović (Vesela motika): Subsidies are social assistance and it is better to call them that

He is a professor of digital marketing and analytics at the Polytechnic of Šibenik, a DJ, and a former owner of well-known clubs, and he is also an entrepreneur. His name is Sergej Lugović and he is the owner of the company Vesela motika, where he developed a technology that allows vegetables and edible herbs to be grown in apartments, houses, garages, and attics – with excellent results. For years, Lugović has been studying the world of agriculture and is particularly interested in innovations in the world of agronomy with a scientific approach to cultivation, so in 2019 he decided to enter entrepreneurship and founded a company that approaches agriculture and all its methods scientifically.

How did the need for opening Vesela motika arise?

– When I realized that I wanted to deal with technologies and food in urban environments, I wanted to separate my university job from my private work. We started from a rented space of 20 square meters and that’s how our first small laboratory was opened. From the beginning, we were guided by the idea that if we research something for cultivation, then we must sell it to someone.

The story gradually developed and in 2019 I decided that I could not sit in two places, and in the meantime, I also obtained a doctorate in machine learning and decided that I wanted to fully dedicate myself to entrepreneurship. Shortly after that decision, as you know, two earthquakes and two lockdowns occurred…

What hit you the hardest at that time?

– We developed the Cleverwheel for short supply chains platform. In my opinion, coming from business information systems, it is a system that covers the entire process from packaging, quality control, invoices, delivery notes – everything. We developed this system with cooperators for three years and launched it in the midst of the pandemic. Then it happened that the system we had developed for so long was replaced by Facebook groups that overnight became web shops due to the pandemic.

We knew we had good software, but there was no longer a need in the market. We decided to return to our roots and started growing and selling vegetables and edible herbs during the pandemic to survive. We were involved as a technology supplier in some EU projects, but then funding was halted for six months. We didn’t know how we would pay people at all and we did everything, from selling at markets to deliveries and various other services.

Today you are in a larger space and have more employees. How did you manage to pull through?

– The demand for technological solutions returned, and with that, we gained new clients. We operate in three verticals: eat, grow, and live green. To be able to grow, we must understand agrotechnology and cultivation processes, and once we grow, we will sell it. However, in the meantime, a very interesting segment of business opened up, which is that we can apply agrotechnology in green solutions.

I must boast that we received a project from the European Horizon program, whose leader is the Fraunhofer Institute, and this is a big deal for us. It has provided us with stability for research, and then it all flows into commercial projects. Property owners and contractors are increasingly realizing the importance of greenery, and there are many green technologies, from green walls to green roofs, and we jump in with solutions and design projects as needed. In collaboration with architects, investors, and builders, we integrate our solutions, and we are now already receiving inquiries from the HoReCa channel.

In Croatia, traditional cultivation is still the most prevalent. Why is that and what change could be the most profitable?

– It’s very simple. I see the problem in several segments. Regarding traditional cultivation, the problem is a lack of knowledge. What we have realized in conversations with clients is that it’s not that they don’t want to learn, but that they don’t have the time for it. Then it happens that a company like Rajska rajčice comes along, receives 100% funding for two hectares of greenhouses, and announces at a conference that it cannot survive. This means that something is not right.

Subsidies are social assistance and it is better to call them that. I openly stated at a conference that there are solutions for this. Instead of subsidies, give vouchers or coupons to citizens through the e-Citizens system and let them decide where to spend that money. I always say that the right paradigm should be from the table to the field, not the other way around. If a farmer knows what someone needs, they would produce it, and for that, a good information system is needed.

A lot is invested in agriculture, and based on some domestic and global examples, one could conclude that this money is wasted due to poor strategy. Why do new projects fail?

– Given my background, I understand the world of startups very well. When a new agricultural technology appears, fear of missing out arises and suddenly everyone wants to invest millions. Venture capital funds play on the fact that one in a hundred succeeds, and vertical farming has emerged as a new technology, but all these startups are just numbers for the investor, because what is a startup? A financial product! For example, we developed a container for growing herbs and vegetables with our partners.

We financed this ourselves and came up with a finished product that can produce up to 750 kg microgreens (vegetables and herbs that are not yet ripe, editor’s note) per month with an electricity consumption of 800 kW. This is truly sustainable and profitable, but the problem is that today everyone has a story in which knowledge is often lacking. Investors do not know this, and in the end, a huge amount of money is lost on a flawed project. The business system cannot sustain the growth expected based on the invested capital, and in the end, technologies are developed that consume more than they earn.

You can read the entire conversation in the digital and printed edition of Lider.