Fitbit takes a punt on Romanian watchmaker
Leading up to its exit Vector Watch, the “affordable luxury” smartwatch which boasts a 30-day battery life, carved a niche for itself in the sector with its simple but stylish designs that work via phone apps on iOS, Android and Windows. The 50m water-resistant watches with LCD screens are sold globally, costing $300 to $500, depending on the model.
The company’s founder Andrei Pitis, will join Fitbit as Vice President of Engineering and head the new Bucharest office. He says that the majority of his engineering team is expected to join Fitbit, including key intellectual property specific to software and firmware development. He also says that his team can make more of an impact on a global scale now that they’ve joined the wearables giant.
“We’re excited to be part of Fitbit as they’re the leader in the overall wearables category,” says Pitis. “With Vector, Fitbit is establishing a cutting-edge development centre in Romania which will offer the company the ability to tap into experienced talent and expand its presence in Europe, the Middle East and Africa — in a cost-effective way,” he adds.
The company set up its research and development centre in Bucharest, Romania’s capital, in November last year. Since Romania joined the European Union in 2007, it has become a popular destination for foreign investors who benefit from the rich pool of IT talent and lower labor costs.
In an online statement, Vector said that no new product features — software or hardware — will be added, but reassured customers that existing warranties will be honored.
Last year, Fitbit also acquired Pebble, another smartwatch maker, which indicates a mission by the wearables company to consolidate talented developers involved in the wearables sector. However, whether these recent acquisitions can help Fitbit boost its share price — which in 2016 lost 75% of its value — remains to be seen.
Like other Romanian tech companies, Vector has benefitted from splitting its team between Romania and the UK. Typically, the former benefits from the large pool of skilful developers who focus on the product development, while the latter develops key business connections. Vector is considered to be a leading innovator in the Romanian startup scene.
In 2015 it was the first startup in the country to raise $5 million in seed investment: Gecad Ventures, a Romanian company, invested $2 million, while a local private equity and venture fund contributed $1.5 million dollars and three private investors made up the rest.
Western companies buying up startups in Central and Eastern Europe is an increasingly popular trend. Another example is Brainient, a Romanian video advertising company acquired last year by Teads, an American company, also for an undisclosed sum.
Invest Romania, a government website, claims that the sector has year-on-year growth of 9% and forecasts it will be worth $4.5 billion by 2020. The sector’s impressive growth in recent years is a mostly a result of increasing service exports: around 90% of Romania’s IT sector is outsourcing for foreign companies.