New Forest Business Frontiers: Interview with Justas Kaveckas of FOROS Forest Auction House.
In advance of the International Forest Business Conference on December 7-8, 2020, we interviewed a few of the event sponsors and partners to hear their perspectives on their expectations regarding future forest sector development. For the fifth interview in our series, we sat down with Justas Kaveckas, CEO & Founder of FOROS Forest Auction House.
Can you tell us a little about FOROS and how you fit into the forest value chain?
FOROS is the first international auction house that operates as an online managed market place dedicated for purchasing and selling forests in the Baltic states. We are focusing specifically on connecting investors with the owners directly. This way, we create a valuable exchange for both parties simplified by technology. At FOROS, our role is to facilitate the process for our clients: they can easily access all the information about the forest, its characteristics and condition. Once the decision is made, the rest is taken care of by us, including all of the administrative tasks or red tape. While we currently operate in the Baltic states, our next step is to list the forests from across entire Europe on our platform. Our overarching idea is that purchasing and selling forests should be as easy as on Sotheby’s or other auction platforms. Open access should promote international transactions and sustainability within our industry.
FOROS is a Platinum Sponsor of the International Forest Business Conference, thank you for helping us make this event a reality. The conference will bring together stakeholders from across the forest sector value chain to focus on megatrends that shape forest and wood industry sectors, highlight the transformation of forest-related businesses towards a low-carbon bioeconomy, discuss tensions between sustainability and cost competitiveness, and call attention to new green innovations. Why is this important to FOROS and how the auction platform offered by your company may support involved parties in forest transactions?
The International Forest Business Conference is really important for FOROS as it reflects our purpose: to unite different industry members and promote transparent, sustainable collaboration. We believe that our innovative strategy to connect the forest landowners and industry members can contribute to the whole forest value chain. Forestry has long been practised in wooded areas by farmers and loggers and has been evolving into a more formal field since the 19th century. It is a business that is based on long-standing traditions. The new developments also shape this field, including an emphasis on sustainability. At FOROS, we understand how important is to integrate forests and wood products into sustainable strategic agendas, including climate change.
Hence, in Lithuania and Latvia, as an example, we are already foster sustainable investment practices, by introducing forestry companies or international corporations from abroad that have a long-term vision and sustainable forest management projects. Consequently, we are securing the most favourable conditions for these large corporations to acquire property and facilitate the process of making high-scale forest purchasing.
What are the advantages of the auction platform offered by FOROS compared to other alternatives?
Over the years, technology has revolutionized our world and daily lives. Our team genuinely believes that the available technological tools and resources must be targeted at transforming the forest industry. We thus, for example, simplify the process to the daily routine level. Using a platform for purchasing and selling forest is as easy as placing an order through Uber.
Besides that, there are many more reasons why buyers and sellers rely on such an online platform. For example, if you are the highest bidder, as a buyer, you could win the property at a lower price than you may possibly be prepared to bid up to. Once the hammer falls, the vendor has sold it to you – they cannot continue marketing the property and see if they get a better offer in the meantime.
On the other hand, thanks to the competitive bidding procedure, the seller may attain a higher price for the property, than expected. The final bid amount also protects the owner from selling the property at a low rate. Finally, the property is exposed to a maximum, international audience that reaches beyond a single region or country. The gazundering is not possible as the seller is committed to the deal. Once the hammer falls, the sale is legally binding at the final bid price and the buyer with the highest offer wins.
Do you believe that FOROS auction platform may reduce transaction costs in forest investments and encourage investors to invest in this asset class?
Based on my personal and professional experience I have realized that purchasing the forest directly from their landowners is a very complicated process. Forestry companies or international corporations usually pass through agents and that makes them lose a lot of time and heavy financial resources. The acquisition becomes even more complicated when the forest is situated in another country. All of us are aware that the agents are purchasing forests from the owners at extremely low prices and then resell them at extremely high prices. What is more, the companies are forced to hire additional human resources to manage all these procedures. In the end, they are making shady deals with these agents. We can not forget that there is an extra fee for hiring a forest specialist in order to check the quality of the property.
In response to all these points, FOROS supports companies and the industry in general by helping them to reduce risks, negative impact, and avoid potentially costly forest management mistakes. The users who take part in our auctions often note that is the possibility to compete with other potential buyers in real-time, is both convenient and transparent. Finally, our team unites professionals in real estate, forestry, law, and sales – who are always ready to provide advice and guidance. Thus, the reduced transaction costs for our users are evidential and open a new and modern way to operate and co-operate.
Justas, we want to thank you and FOROS again for helping us put on the forest business conference. It seems that your business opens new opportunities for investors and contributes to the megatrends in the forest and wood industry sectors. Is there anything else that you would like to mention about the event or the development of your company?
First of all, it is a great honour to attend your conference and to have an opportunity to present FOROS.
Today, 3 years after FOROS started its journey, we are pleased to announce that our product and its value proposition matches the long-term needs of the customers and the industry itself. After achieving product-market fit, the next step of FOROS is to scale by connecting even more customers. Currently, we specifically focus on growth in different European countries, such as Romania, the Czech Republic, Poland, and others. Our next goal is to provide an opportunity for the industry members to not only purchase forests, but also to book and conduct forest management activities remotely, and ensure the transparency of their property.
To be truly visionary, FOROS will take advantage of real-time data analysis in order to provide regular updates to the landowners on the actual value of their property through automated value estimation.
Finally, we aim to extend the functionality of our services and introduce cutting ride operations as well as selling the woods. We are thus open for partnerships with investors that would share our vision and would like to collaborate on these future developments. At FOROS we believe that the forest industry is critical for our planet. The more clarity and effective solutions we can bring to this industry, the more beneficial it will be for our current and future generations.
Thanks again for taking the time to talk with me; we are looking forward to continuing to work with you and see you soon at the International Forest Business Conference (7-8 December 2020) Online Edition (registration still open).
More information about FOROS can be found here: https://www.foros.co/
Justas Kaveckas – CEO & Founder of FOROS. Justas is an IT systems architect by education but a serial entrepreneur by experience. Years of developing businesses and advising companies in real estate acquisitions led him to innovate the business model of forestland transactions. He believes that forestlands and timber is an asset class which can be traded like stocks or commodities in stock exchange type platform and also will be popular as long term sustainable investment. Justas aims to bring more transparency and liquidity in forest and timber transactions.