How B.C.-based startup, VodaSafe, overcame a cash crunch caused by COVID

Using Easly Advances, VodaSafe turned its accrued SR&ED tax credits into non-dilutive cash, enabling it to pivot and emerge from the pandemic with international expansion in its sights.

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When a swimmer goes missing, the status quo for beach rescue requires all lifeguards on duty to form a chain, and comb the water by walking and diving in a grid pattern.

"It's the worst and most terrifying situation because you can't see," says VodaSafe's founder and CEO, and once-upon-a-time lifeguard, Carlyn Loncaric. "It's one of those situations where you desperately want to find them, but you're also terrified of finding them, because what if you're too late?"

This harrowing procedure is just one of the many dire situations first responders find themselves in when rescuing people from bodies of water. Loncaric was determined to find a way to improve the status quo, and with it, save lives. "It just didn't make sense to me that we didn't have anything available for the average rescuer to use. So, I wanted to create something easy enough for a 16-year-old kid to use in the worst moment of their life, in the midst of panic and surging adrenaline."

Drowning is the third-leading cause of unintentional injury and death worldwide, and it's estimated that 42 people die from it every hour. When it comes to water rescue, time is of the essence; that's where Loncaric and the team at VodaSafe focused on making a difference. VodaSafe developed AquaEye, a sonar-based tool enriched by AI that can locate people underwater. The tool is powerful enough to scan one acre of water in under two minutes: a vast improvement on the status quo. AquaEye launched in late 2019, and the company planned to take the product on a roadshow, with 35 conferences lined up across North America throughout 2020. The team was going to rely on existing distribution channels to get its life-saving tech to the front lines, rather than build out an in-house sales infrastructure.

VodaSafe's go-to-market strategy hit a massive roadblock when all the conferences it planned to attend in 2020 were cancelled due to the COVID-19 pandemic. Furthermore, the first responder teams it intended to target had their focus and funding sharply directed toward pandemic response. New equipment for water rescue just wasn't in the budget, no matter how much it improved outcomes.

“We had a ton of first responders who were interested in the product, but their budgets were frozen for 16 months. Our market was pretty much abolished worldwide,” said Loncaric. Supply chain issues further exacerbated problems for the company. With revenue generation squeezed, securing capital to maintain operations became difficult. "The cash flow wasn't there, and when you're in a cash crunch, the only thing that matters is cash."

VodaSafe used Easly's founder-friendly financing to secure non-dilutive capital.

VodaSafe needed to pivot, and to do that, it needed cash. "We had to sustain with no sales through 2020, and start from scratch in 2021, which was a massive difficulty to overcome," said Loncaric. With Easly Advances, VodaSafe advanced its accrued Scientific Research & Experimental Development (SR&ED) tax credits, providing the company with much-needed cash flow to see it through the pandemic.

"Easly's not scared off by startups,” said Loncaric. “When you're building a hardware company, it takes time to build up revenue generation. Easly enabled us to continue operations so we could keep going."

Many innovative startups and scaling companies claim SR&ED tax credits annually, and receive a refund of up to 65 percent (depending on which province they're headquartered in) of eligible expenditures. While these refunds can be substantial, their annual delivery isn't conducive to the cash-burn requirements of a growing company. Financing those credits as they accrue throughout the year gives businesses access to capital on their schedule, rather than waiting for an annual lump sum.

With conferences back again, VodaSafe is thriving. Its innovative product was recognized at BC Tech's 2022 Technology Impact Awards in Vancouver, where the company brought home the Startup Company of the Year Award. Now, the outfit has its sights set on international markets. "We've started working in Japan, Indonesia, Europe, Africa, and Australia,” said Loncaric. “2023 is our year to go global and figure out how each country solves their problem currently, and how we can help."


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