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Chameleon Smart Home Solutions Developer Enters BSE Xtend

Analysis

Péter Szarvas of Chameleon Smart Home rings the Budapest Stock Exchange bell on the day the company’s shares were listed.

Innovative home solutions are rising in Hungary, even if the market lags internationally. Chameleon Smart Home Plc. recently floated its shares on the Budapest Stock Exchange’s Xtend market and is eying local and international expansion. The Budapest Business Journal talks to Péter Szarvas, founder and chairman of the board, about the listing and the potential in the local market.

Sales in the total Hungarian smart home market were forecast to be around USD 185.8 million in 2022, according to PerryHope Partners, a publisher of global market analysis and product reports based in Naples, Florida.

Hungary (where one in four households lacked an internet connection in September 2022, according to local telco Yettel’s figures) is behind international smart home markets. PerryHope Partners estimates the North American market at USD 32.7 billion, the Asia-Pacific region at USD 31.5 bln, and the European market at USD 17.8 bln in 2022.

Nevertheless, by the end of this year, sales in the Hungarian smart home market are seen as increasing by 21.2%. Globally, a compound annual growth rate of 20.1% is predicted from 2023 to 2028, reaching USD 452 mln, according to PerryHope Partners’ latest 2022 Global Innovative Markets Forecast.

Founded less than half a decade ago in 2017 by Péter Szarvas and Róbert Bíró, Chameleon has expanded into international markets, delivering solutions to Europe and Canada.

“In 2018, we received our first capital investment of HUF 75 mln from the incubator company SmartWare.tech, and later also angel investors came in with smaller amounts, making it HUF 200 mln,” Szarvas tells the Budapest Business Journal.

Finding Investors

“When I founded Chameleon, I already knew the pace and scale at which I wanted to develop the company, and it became clear to me early on that we had to be listed on the stock exchange. We were looking for a new investor, and that’s how we and Hiventures found each other. It invested a total of HUF 850 mln in three rounds,” the president explains.

When the founders started working on smart home technology, they realized that vendors’ products would typically only communicate with their native software. A lack of interoperability in the domestic market hindered the integration of systems.

“This is a big risk on the user side. If you commit to one direction, you cannot switch to another later or add new tools to your previous system. We believe that interconnectivity, integrability, should be fundamental in the 21st century,” Szarvas says.

Therefore, Chameleon started working on systems that would allow the integration of devices and services from different brands and technologies. Chameleon’s solutions can control lighting, air conditioning, temperature, household appliances, and security equipment via a central “brain” that connects them and communicates with the in-house developed software and apps.

“Today, the real value lies in the high level of software expertise that gives the smart home a system,” Szarvas believes.

For example, Sky Shutter Control, one of Chameleon’s systems, allows users to shutter the blinds when the sun is shining, which goes beyond simple comfort and convenience and taps into energy savings.

“The current energy market environment highlights the importance of being energy conscious in your own household, as a smart home means quantifiable savings. We are developing in the latter direction, with Chameleon’s technology capable of integrating solar PV systems and our market-first semi-island solution, which makes the energy generated fully usable,” says Szarvas.

Technological Leaps

Chameleon says it has made two significant technological leaps. Firstly, it has developed beyond its wired systems and established technology for newly-built homes where its wireless solutions offer the same robust experience, albeit with more flexible integration. Secondly, its UpHome system can turn entire apartment buildings, not just one apartment, into smart condominiums.

In the first half of 2022, Chameleon joined the EU-funded Mentor Program, part of the Budapest Stock Exchange’s services for mid-sized companies to support successful listing. On February 2, 2023, Chameleon’s shares were listed on BSE Xtend, the market opened by the bourse in 2017 specifically for medium-sized businesses.

Chameleon, which started as a classic startup and has remained in that mindset, according to the co-founder, does not intend to be acquired by a larger market player but rather to stand independently.

“We could have moved in other directions as well, but all along, we thought that going public could catalyze our growth. As we were also planning a major international expansion, we saw that a company listed on the stock exchange would be viewed differently by a partner in the United States or Asia. Given our current ambitions in foreign markets, the listing has fully met our expectations,” Szarvas said.

By 2018, Chameleon’s product and service package had reached a stage where it could be sold in a B2C arrangement. In 2021, however, the company realized that the model undermined growth. Therefore, it looked into expanding abroad via a distributor network.

“Today, we only sell through our partners. We definitely wanted to expand abroad, first in the neighboring countries, and we are now present in Romania, Serbia, Slovakia, Austria and Germany. But the ‘big bang’ was our entry into the Canadian market, which is of a completely different dimension compared to Central Europe,” Szarvas notes.

The company has ambitious plans. “Going public on the BSE Xtend is only the first step. As the number one player in the domestic market, we would like to enter other stock exchanges as well and find investors similar to the Canadian model; for example, in the Middle East. On the one hand, it could expand the fundraising, and on the other hand, it could open up huge markets for sales, and with that, multiply revenues,” Szarvas concludes.

This article was first published in the Budapest Business Journal print issue of March 10, 2023.

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