Last week, I commented on a short-form pitching event hosted by General Assembly. This week, I report on Startup Victoria‘s latest pitch night, “Pitch in Melbourne”, which may become a more regular fixture on the startup circuit. It seems we can’t get enough of these events….
In contrast to “Out of the Garage”, “Pitch in Melbourne” was a more in-depth, long-form pitch event, with only three teams competing (for a prize of $50,000 in seed funding), and all of them are currently going through accelerator programs. Their presentations were about 10 minutes each, with ample time for Q&A with the audience and panel, ably assisted by MC Leni Mayo.
The underlying idea was to reveal some of the thinking that prospective angel investors apply when considering new proposals. Even with the opportunity to listen in on the judges’ deliberations (who were effectively choosing where to invest some of their own money), it was still a slightly artificial exercise, because in reality, few investments are made after just a 15-minute presentation.
The pitches were reasonably proficient, although the market sizing, opportunity assessments and financials were a bit thin. One startup appears to be making potentially serious money, another has validated their model with a commercial client, while the third is still working out a go-to-market strategy:
SweetHawk has featured in this blog before, and is building integrated voice solutions for e-commerce and m-commerce. During beta-testing, SweetHawk has helped a venue booking agency to deliver more business to its clients. As a result, the team believe it will have most success with high-value, complex and non-commoditised products and services, where talking to prospects means much, much higher conversion rates from enquiries to firm sales. The service pricing model looks like it needs more work, and more market segments would need to come on board to demonstrate the commercial application. Experience also tells us that big-ticket B2B items are less likely to be bought on-line, and rarely after only a single touch point. Plus, companies usually have strict policies around employees paying for enterprise purchases with their individual corporate credit cards, require purchase orders to be raised in advance, and often outsource their buying to third-party procurement services.
parkhound perhaps likes to think of itself as part of the sharing economy (“an AirBnB for car parking”), except that it’s trying to create long-term contracts, not overnight deals. It also faces strong competition, not only from other providers within Australia and overseas, but potentially from AirBnB itself as it develops a similar add-on service following its recent deal with ParkMonkey. There’s also the prospect of that other darling of the shared economy, Uber bringing its app technology to car parking as well. So far, parkhound has signed up a solid inventory of spaces, and is starting to acquire some more substantial corporate accounts. However, spaces in commercial buildings and residential developments normally require dedicated hardware and other technology solutions such as smart boom gates to allow non-residents and non-tenants to gain access to secure areas. One suggestion from the panel was to sign up more residential spaces close to train stations – although such a strategy risks “off-platform leakage”, by cutting parkhound out of the picture if householders choose to go direct to market (e.g., via Gumtree or similar). Finally, there is evidence that car ownership is in decline among some sections of the population, and the prospect of driverless cars could mean we will only need between 10%-30% of the current number of vehicles on the road.
nuraloop are building customised headphones that are attuned to our own ears, incorporating some proprietary technology called earSync (“a virtual Cochlear”) that is designed to enhance the user experience when listening to music. I’ve seen the team pitch before (with some success), but despite the medical, scientific and engineering pedigree of the team, it seems they are only interested in the product application for music. Sure, getting TGA status is complex without medical evidence, but other options in the area of OH&S might not be so onerous to pursue. However, a bigger concern for the judges was the fact that the founders are not clear whether they are developing a hardware product, or seeking to licence their IP to other manufacturers. The good news is that most of the audience indicated they would subscribe to the crowdfunding campaign, and nuraloop won the audience choice.
Although it wasn’t entirely clear which pitch won the $50,000 (if indeed any of them did – specific term sheet negotiations weren’t going to be discussed publicly), I think it would have been a close call between SweetHawk and parkhound. One judge even suggested the two of them should be collaborating – but he was possibly biased. Despite the different startup domains, the judges were assessing the validity of the business models, the level of novelty/disruption, the teams’ strengths and capabilities, the commercial attractiveness of the idea, and above all the ability to execute and scale.
Both these events demonstrated that pitching is not easy, that there is a balance to be achieved between a slick sales presentation and a detailed analysis of the product/market fit. It’s certainly not just about the “idea”, and teams will be challenged if they can’t substantiate their claims or don’t come across as authentic or convincing. Ultimately, there’s no such thing as a perfect pitch (it’s all very subjective), but it helps when preparing to become pitch perfect!
Next week: Counterparty risk post-GFC