12/01/2012 Leave a comment
On 30-Nov-12 the Enterprise Development Company (EDC) had organized an event titled “Emergent Technologies Business Showcase“. It was a full-day event held at the Doubletree Hilton Hotel in Deerfield Beach. The purpose was to bring together entrepreneurs, investors, researchers and technologists for presentations and pitches by 18 regional startup companies and for general networking. This post is a personal recap and includes my notes on each company (Problem, Solution, Demo, Customers, Questions) and the lunch panel discussion.
Disclaimer: The content is not an official or complete listing; all opinions, omissions and mistakes are mine.
The 18 presentations showed the vibrant technology entrepreneurship in South Florida across industries including Healthcare, Commerce, Media & Advertising, and IT Services. Most businesses leverage the Internet, almost all target mobile devices (phones, tablets), many with social network integration (Facebook, LinkedIn) and some with location-based elements (GPS). Interesting use of technologies such as Microsoft Kinect (mLabs) or use of medical imaging with robotic surgery (Neocis). Some companies build on proprietary technology accumulated over many years, such as Natural Language Processing (LinguaSys), matching rules (University Research and Review) or cyber security rules (SafeMedia). The companies ranged from pre-seed stage startups to more established businesses built on decades of IP and research. The presentation format (12min pitch, 3min Q&A) worked well for this mixed audience (about 100-150 in attendance).
Although I have no experience at this, I pretended to be a VC and listened with the intent to come up with the Top 5 companies I would take a closer look at for potential investments. Most pitches of companies who wanted to raise money included financial projection spreadsheets 3-5 years out.
I found these projections nearly totally useless, as they are basically wishful thinking souped up with some math. It reminded me of the saying: “It’s better to be approximately right than precisely wrong.” Nobody can accurately predict 3-5 years out in this market, even the size of the market opportunity itself depends on so many assumptions, not to mention the potential for successful innovations and disruptions (like the iPad). I doubt that any early stage investor will pay much attention to these numbers.
Most pitch decks also included a competitor slide with their own product being the only one with all feature checkmarks in its column. While more useful than the financials, it gives an idea as to how seriously the company is following its competitors and how it tries to differentiate itself.
In the B2C space, especially using mobile apps to provide their service, most businesses assume an exponential growth of their customer base. Everyone hopes to become the “next big thing”. Yet we know that human consumer attention is finite and only very few brands are getting some of it. As a result, attention inequality on the Internet is extremely large; a few businesses get nearly all of it and almost everyone else gets hardly any of it. My hunch is that, sadly, most of these approaches will never take off. The panelists stated they would consider a 10% success rate of early stage investments a respectable outcome. So which 2 of the 18 pitched here will go on to become wildly successful?
Lunch Panel: How to raise money in this economic climate?
- John Duffy, CEO 3Cinteractive
- Raj Kulkarni, Investor
- Richard Licursi, venVelo
- Casey Swercheck, Florida Growth Fund, Hamilton Lane
What are you looking for in a startup to fund?
- team with more than an idea, already has done some tangible results
- not so much the “has been there, can do it again”, as often lots of luck involved (right time, right product)
- Angels are typically investing locally; early state investors will be interested more regionally.
- South Florida is big on life sciences
- As entrepreneur you have to expect to fail and set expectations appropriately
- 10% hit rate would be considered successful for Angel Investor!
- Entrepreneur has to be able to deal with uncertainty, to make changes and move on.
How should I think about next round after Angel to Institutional Investors?
- It’s a long dance. Especially in the Life Sciences due to long period until return.
- As entrepreneur you quickly learn to pay attention to failures and to where the money is coming in.
How do you know when it’s not getting done (i.e. time to place leadership)?
- often self-evident, but sometimes pattern of getting turned down for same reasons.
- get a good board which holds the CEO’s feet to the fire; get used to hi level of discipline.
How to arrive at the right level of valuation?
- reason #1 for investors to walk away: Valuation too high.
- can be avoided using convertible notes
What do you see in the next 12 months as growth markets in South Florida?
+ Healthcare (40%, half IT, half services)
+ IT, SaaS businesses (20%)
+ Analytics, Big Data
– less attractive Clean Tech, BioTech, LifeSciences due to FDA approval cycles.
– Institutional investors are making later stage deals, which makes angel investors more important.
- investors tend to stick to what they know, since otherwise they can’t do the due diligence.
What are usual terms for CEO?
- convertible notes could be a good way to go.
- don’t make it too complicated legally; use a template like from Y-combinator
How do you avoid dilution?
- should not be a major concern; better to own 5% of sthg very valuable than 50% of sthg worthless
Long-term implications of crowd-funding?
- good for entrepreneur, perhaps not able to raise large amounts of money.
What is a good management team?
- Have people doing what they are really good at.
- People need to be very passionate about their business and focused on execution.
- Good people management skills.
- Realistic about not having all the answers.
- CEO should know his/her own limitations.
How important is the team of co-founders? (More than one)
- very important to avoid blind spots, complement each other, have constructive discussions
- reduce risk if one founder walks away
- “If you don’t have more than one person willing to invest, you are probably not ready.”
- “If you are likely to fail, you might as well have fun doing it.”
- ”The most important things in a startup are: Management, Management, Management, Market.”
- “It’s going to take twice as much money and 2-3 times as much time to succeed than you think.”
- ”Getting their (investors) money is good. Getting their feedback is often even better!”
Detailed Notes (structured for every business in Problem, Solution, Demo, Customers, Questions)
- Healthcare Industry
Industry: Medical Device Manufacturing (Robotic Surgery)
Robotic guidance for dental implants
Very high tech approach!
Surgeons often “fly blind” when drilling for dental implants, resulting in bad fit or failures
Use CT scan pre-operative,
Same day hook up tracking arm, robotic arm creates a boundary for surgeon to work inNo manufacturing from model = no delay
Saves time and $$$
Relatively cheap HW install, plus implant fee ($350) and annual license fee ($10.000)
Screen shots and video of system in use
Big growth potential, annual $4.5b market of dental implants.
~1m surgeries per year.
CT scans as enabling technology are now widely available.
Good sales & marketing plans, reusing existing channels.
How large is the guide market? Only 5-10% of cases are complicated enough to need guidance.
Why is timeframe so far out? Relatively quick for a medical device.
- Kipu Systems
Cloud-based electronic medical records system developed specifically for addiction treatment centers.
Existing records keeping systems are often paper-based, hard to manage or search.
Addiction treatment centers are growing in number and size; FL is a center for them.
Rather low adoption of EMR (18% in hospitals, 38% in practices)
Behavioral treatment incompatible with EMR workflow
Owners a not medical doctors
Integrates medical and administrative functions
No need for dedicated IT staff
Always available (cloud-based)
Interactive iPad interface.
Treatment centers in the “neglected industries”
Detox, substance abuse, behavioral treatment, homeless shelters, etc.
How does this system help with compliance (of patients)?
- mostly helps facilities and staff, not patients directly.Isn’t a $10k setup fee too much for some small treatment centers?
- we are willing to work with any client…
- possibility to move towards subscription-based plansHIPPA compliant?
- yes in practices, but not certified yet.
Brian Garr, CEO
Natural language processing NLP
Big Data (mostly text) – explosive growth
Sentiment analysis (Twitter), often in non-English languages
UnderstandAny to any language possible
Core asset = ontology built over decades
Search twitter for “murder ice agent mexico”
Semantic resolution of ambiguous words (based on ontology) + translation of Spanish tweets
Ontology is core asset, allows to create rich models faster.
Fidelity translates stock documents
Salesforce.com uses it for marketing cloud
Sweden – forensic company for governments
How protect IP?How comparing to statistical approaches?
Gap between users & Emergency Services
Response data for police often missing
Crime rate is increasing
HELPN App – creates instant. Link between users and emergency services
Ack GPS of app user
Feed audio stream to operator
Detailed user profile
Screenshots of emergency services
From 6-9 min down to 2-4 min
Mostly college campus (FAU, UM Miami, etc.)
$3.95 / month subscription per user
How to protect from accidental use?
On Apple do you require jailbreaking system?
How long for integration with campus IT? (Integrating with Azure)
Actual customers right now? (Talking to CTO of FAU right now)
Interactive and gesture-based displays for shopping or general information
Using Kinect controller and virtual touch screen interface
Awesome Kinect video of touch-less interaction
Interactive kiosk for real-estate agency property displays controlled by gestures based on Kinect controller.
V Motion YouTube video showing some sort of virtual DJ rock performance playing virtual drums based on light and gesture control.
Pre-seed stage. Moving into incubator next week.
6-8 weeks away from usable products.
What’s main motivator for this technology?
- it’s to increase interaction and engagement of prospects.
Do online contests and have community vote on the candidates
Banner ads are very unlikely to be clicked.
Create a platform that monetizes user generated content with branded contests that combine clear brand message with a strong call to action
How do you protect from inappropriate content?
- University Research and Review
New “anti-ranking” enrollment lead service for 8000 unranked colleges, generating leads by providing individualized service to enrollees.Founder Joe Schmoke, refreshing perspective on entrepreneurs and investors.
Many students change majors and/or colleges because they are not sure what they really want to major in.
College rankings are just lists which are not personalized for the individual student.
Match-making (Personal College Advisor) based on in-depth interview, college database and matching criteria.
Suggest 3-5 schools which appear to be the best fit for potential enrollees.
Target: Build an enterprise value of $100m in 5 years.
Challenge to generate revenue.
Licenses (like J.D.Power -> $300m/year)
Lead Generation (like QuinStreet -> $400m/year)
More than 15m people think about enrolling each year;
8000 unranked colleges.
- Media / Advertising
“The media delivery platform that doesn’t need the satellite”
How to deliver hidef media content without satellite spaceFor example, if you want to download a YouTube video and stream it into your organization?
Use cloud-based approach;
Mediamplify is the hub between content creator and consumer (cable companies, web, mobile)
DMX Music -> DMX2GO
How to differentiate from Akamai? (Newer technology, Akamai based on obsolete technology? Bridge world between web and cable world.)
Cyber Security firm, based upon very mature and established technology.
How to make network and cloud secure?
Unwanted traffic coming in from or going out to Internet.
Fully integrated appliance.
(Didn’t really describe the technology or IP much)
Detection technologies with protocol and behavior analysis plus AI tables
Intelligent libraries with over 48.000 rules in place, 30 years of building and IP.
Fast analysis, attractive GUI (I have not seen it)
Very high detection rate
Competitors: HP tipping point, Sourcefire, McAfee
LexisNexis, various universities, Emerson Electric CompanyEducation is by far the biggest market segment (73%)
What happens with false positives? This solution does not depend on signatures, but on behavior; this leads to lowest rate of false positives.
LAZO “Lassos” Customers
When you drive by outdoor billboards, you need to remember the number and may forget before getting to call them.
Businesses spend $4000/mo on billboard and may lose actionable prospect
Use location service of smartphone to find out whee customer is and what billboard they see
Open app on phone, it displays list of icons, when you tap on them you get details of that ad offer.
Dynamic updates of ads are possible.Added Content Mgmt System for advertisers.
Screenshots of phone app, but no demo.
Companies want ads to be more social and more interactive.
McDonalds, Verizon, Pepsi, AT&T
~1m billboards in the US, ~4m worldwide
Where is this system used and how to scale nationwide?
- Showcase in SoFla, using ~200 billboards; launching with Staten Island ferry
(I didn’t catch the scaling answer)
- Business, IT Services
Realtime collaborative platform for mobile and webHow do you explain a visual concept over a phone?
App allows WiFi based collaboration
Using fingers to annotate drawings or slides
“A picture says more than a thousand words”Whiteboard capacity
Very efficient Custom server infrastructure built in Erlang
Presenter highlighted slide content of the presenting laptop from his iPadOriginally paid app, now Freemium model
First remote whiteboard to market on iPad.IBM, UBS, American Airlines, TriNet, Credit Suisse, etc.
16000 downloads, 7700 paid downloads
What are the differentiators?
+ server-license allows for use behind firewalls
Integrator of facial recognition API technology with time-keeping software
Lots of inaccuracies in payroll and attendance solutions
Use of face recognition APIs as biometrics for accurate time keeping systems
Achieving 99.4% accuracy
Market is big, airports, government, supermarkets, etc.Partners: ingenico (POS solutions), improvizations, ShiftPlanningCompetitors: Kronos, ADP, Oracle, OmniPerception
Can you integrate with other biometrics?
- Yes. Secondary level of fingerprinting is available (partner integration)
What about ROI?
- big if no other biometric system in place yet (?)
Any thoughts about extending to mobile payments?
- PayPal is interested
“Because it’s good to know whats going on in your business”
No affordable solution exists for small businesses for BI
Information is located in silos, which makes it difficult to connect the dots.
Enviro+ is a portal that integrates data from backends such as Salesforce.com
Sreenshots of solutionLarge SaaS BI market ($3.7b/y in US, part of $12b BI market)Focus on Manufacturing and Wholesale Trade (with high CAGR for BI solutions)
Subscriptions, support services, affiliate sales, platform offerings
Affordable Cloud Storage at $20 / year for 20GB
Video with sales pitch, very basic script though, low quality audio.
Untapped niche video-chat (so far used only in erotic sevices) is being discovered for services like
- singing or musical instrument lessons
Today lots of issues around convenience, trust, payments, discoverability, etc.
Live video-chat monetization platform and marketplaceIntegrated with LinkedIn to obtain qualifications!
Video with screenshotsBackground photos customized for vertical (such as courtroom for legal advice)
Can you import professional profile from social networks?
- Yes, in particular LinkedIn and FaceBook.
Possible to get multiple consultants per account?
- highly requested feature, in the works.
Can sessions be recorded?
- not on provider side (sensitive content)
Wedding decor $10-20b annual market often delivers bad products for lots of moneyStuck between old garment world and new Internet eCommerce world
Deliver couture quality product to brides – brand and options and online
Not gowns, but accessories. (Eliminates fitting issues)
Social shopping online
Lean manufacturing (Toyota system) in India?
Personal atelier allows color picking and personalization
$700k raising at present ($430k closed)
“Spend low. Spend local.”
What if you are looking for a service (like a moving company)?
- Google -> lots of hits, how to tell one from another?
- AngiesList -> how to trust reviews when both good and bad ones are online?
All need same info, very frustrating. Should have one description for all contractors who are bidding.Similar to Priceline for airline tickets and hotels?
Prescreened service professional
Local help available
A modified reverse auction (name your price, every bid under that will be considered)
“In excess of 300 transactions”Seeking $200k for expansion
How do you scale prescreening of contractor (unlike community approach on AngiesList)?
- best source would be reviews from within my own social network.
“Where Mobile meets MainStreet”
Typical customer has ~18 apps for their favorite businesses (hairdresser, dog groomer, liquor store, pizza parlor, dry cleaner, etc.) on their phone.
Bizhappy is a mobile app that integrates all favorite businesses into one appFor small businesses it creates a platform with fixed fee $599/year to push out notifications to customerrs.
Screenshots of app with typical info requested by customers such as store hours, gallery, directions, etc.
Help 27.5m small businesses
in 2015 1b smart phonesLarge member networks: BNI, Chambers, Groups (like Toastmasters) which make bizhappy scalable
Resellers: Vistaprint, FedEx, UPS Store, etc.Seeking $2m investment!
How will you get to the brand recognition you need?
- $1m marketing budget and hope for viral marketingHow different from Groupon (local deals)?
- main benefit is immediate gratification for small business