Ten years ago, brothers Kaur and Kaspar Kallas founded Digital Sputnik Lightning OÜ, a company focused on developing and manufacturing cinema and television lighting for the U.S. and European markets.

The company quickly garnered public attention, as their innovative LED film lighting system was used in Hollywood productions such as "Rogue One: A Star Wars Story," the crime series "True Detective," the sci-fi disaster film "Independence Day: Resurgence," and the drama "Lion."

Digital Sputnik attracted a number of well-known investors, including Indrek Kasela, Jaan Tallinn, Sten Tamkivi and many others. However, the company has now filed for bankruptcy.

Kaur Kallas told ERR that over the years, Digital Sputnik raised about €7 million from investors.

"Unfortunately, manufacturing the new Apollo product family in Estonia proved to be complex and expensive, and our investors were not interested in funding it. In recent years, hardware startups have become unattractive to investors because it usually takes three generations of products and around ten years to scale and develop a globally competitive product," Kallas explained.

As a result, the company began searching for suitable partners in China six years ago. Last winter, they succeeded in finding a factory that offered the right balance of price and quality. Kallas also started sourcing local component suppliers from China and assessing their quality.

"We were able to reduce the product's cost by slightly over 50 percent compared to manufacturing in Estonia. Additionally, all component suppliers are located within a 100-kilometer radius of Shenzhen, allowing us or the factory representatives to visit suppliers quickly and easily if necessary," Kallas described.

Thus, according to Kallas, Digital Sputnik effectively halved the product's price and found a factory capable of scaling production to thousands of units per month within a few months while mitigating risks associated with fixed production costs.

"At the same time, we are a startup that is now ten years old and produces high-tech hardware. This puts us in a sector that is not attractive and deals with very complex issues, many of which our shareholders are not motivated to delve into," Kallas admitted. "Today, there is more of an expectation that within a few years, it should be clear whether the company offers a scalable solution."

As a result, the company's achievements did not motivate current owners to invest further, and without a marketable product, it has been difficult to attract new investors, according to Kallas.

Digital Sputnik was forced to halt the production of its previous products in 2022 because components were no longer available following the COVID-19 pandemic.

"In 2022 and 2023, we found interested investors, but their conditions –
such as a low valuation and a precondition that founders would retain 70 percent of the company – were unfortunately not acceptable to our current shareholders. Since the founders currently hold a minority stake, we had to decline the investments due to these unacceptable terms," Kallas explained.

The company has not submitted its annual report for the past fiscal year. In 2022, it recorded a loss of €1.085 million on revenue slightly over €181,000. At that time, Digital Sputnik had ten full-time employees, and wage expenses, including taxes, amounted to nearly €289,000.

In 2021, the loss was even greater, amounting to nearly €1.918 million, with revenue of approximately €726,000.

According to the Business Register (Äriregister), as of August 23, the company owes tax arrears of €40,776. Additionally, since April, they have failed to submit monthly VAT declarations, and since May, they have not submitted income and social tax declarations.

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