YBF #FinTech pitch night

It’s getting difficult to keep up with all the FinTech activity in Melbourne – from Meetups to pitch nights, from hubs to incubators. The latest Next Money / York Butter Factory / Fintech Victoria pitch night was a showcase for three startups-in-residence at YBF. As such, it was not the usual pitch competition – more an opportunity for the startups to hone their presentations.

First up was Handy, an app-based solution that connects trades with customers to streamline the settlement process for property insurance claims. There is an industry-wide low-level of satisfaction with property claims – which can take up to 60 days to process, even though 80% of claims are for less than $5,000. Handy offers a faster solution, and doesn’t require a lengthy estimate or quoting process, using instead fixed-price rates. With a target market of 100,000 claims per annum, Handy expects to generate 25% savings to the insurance industry, as well as having a broader societal impact in terms of speedier claims, better appreciation of service providers, and more consideration of the respective needs of householders and trades. Launching an MVP in November, there are four insurance firms in pilot test mode. Aiming for a white label solution, Handy will charge clients basic setup and maintenance fees, as well as volume transaction costs (although the exact pricing and revenue model still needs to be worked out). There were audience questions about the liability for quality of work and dispute resolution, the trade supplier on boarding and verification process, and the process for communicating to policy holders whether their insurance provider or broker is covered by the platform.

Next was FinPass, a startup appealing to the 40% of the workforce expected to be freelance by 2020 – a key feature of the gig economy. Targeting so-called “slashies“, FinPass is designed to help customers apply for personal loans when they don’t have a single, steady or stable source of income – and therefore, may lack a formal credit rating or personal credit score – while adhering to the five Cs of credit. Using a combination of blockchain and API to validate a loan applicant’s income profile, FinPass would then make this data available to approved lenders (subject, presumably, to consumer credit and lending standards, customer privacy and data protection requirements). To be fair, this project was fresh from winning a recent hackathon event, and therefore is still at the concept stage. However, it was clear that much needs to be done to define the revenue model, as well as designing the actual blockchain solution. Audience feedback questioned the need for a standalone solution, given the existence of various block explorers, APIs, vendors, protocols and bank feed sources. In addition, while blockchain provides a level of transaction immutability, and since only the hash-keys will be captured, the SHA’s will only confirm the hash itself, not the veracity of the underlying data?

Finally, there was Resolve, a two-sided market place for the insolvency services – a platform to buy and sell distressed businesses. Designed to capture turnaround opportunities, the platform has a target market of 14,000 transactions per annum – of which only 1% currently advertised, simply because it’s too expensive to use traditional media (i.e., finance and business publications). In addition, 92% of companies that enter insolvency return zero cents in the dollar to their creditors. Part bulletin board, part deal room, Resolve aims to create a passive deal flow for this alternative asset class. When asked about their commercial model, the founders expect a turnover based on a few hundred businesses each year, and revenue coming from a flat $1,000 per listing – but the key to success will be building scale.

Each of these early-stage startups represent promising ideas, revealing some innovative solutions, so it will be interesting to follow their respective journeys over the coming months.

Next week: Bitcoin – Big In Japan

SportsTech and Wearables Pitch Night at Startup Victoria

Appropriately hosted within Melbourne’s Olympic Park, last week’s Startup Victoria pitch night featured four companies working in SportsTech. It was further evidence of the breadth and variety within the local startup sector even if, on this showing at least, there was a little less innovation than we have seen at other monthly pitch nights.

First, there were a couple of presentations from Catapult and Genius Tech Group, to help provide some context to the topic, especially helpful for people who may not be familiar with this sector. However, I’m not convinced that referencing Australia’s Olympic medal tally as a key rationale for building a sports technology industry necessarily set the right tone. For a start, despite some gold medal success in the 2000, 2004 and 2008 summer games, Australia has seen a rapid decline in medal performance at the past two Olympiads. Then there are the cultural and governance issues at the AOC itself.

Then came the pitches, in order of appearance (website links in the titles):

TidyHQ

With the slogan “tribes are everywhere”, this business is all about getting the off-field performance right. TidyHQ is supporting smarter sporting clubs and organisations by helping them with things like governance and succession planning, and by having all their back office operations in one place. Essentially a white label portal solution that offers branded websites (“SaaS doesn’t work in this market”), the service is designed to support grassroots clubs and associations, across all sports.

Using a freemium subscription model, the main sales channels are local and regional AFL leagues. Sales are helped by a viral effect – given that in small towns and regional areas, there is quite an overlap of club officers.

TidyHQ also takes a clip from sales of multi-stream products and services sold through their customer sites, which includes a diverse range of clients such as yoga studios, play groups, plus a number of US sororities, fraternities and law schools.

Competition comes from different quarters: vendors like TeamSnap and SportsTG; incumbent club officials and their spreadsheets; even social media. One challenge, however is managing and harnessing the “volunteer mindset” associated with community sports clubs, especially when it comes to budgets and adapting to change.

RefLIVE

This company has built an app for soccer referees that works on smart watches. Referees typically use stopwatches to record match time and stoppages which, with constant match use have an average life of 2-3 years. Yet referees also have to keep track of player substitutions, match scores as well as the yellow and red cards they hand out.

At a price point of $60 per annum for referees, and annual fees of between $5k and $50k for soccer leagues and associations, an ideal entry point for RefLIVE would seem to be local, short-form knock-out tournaments, where the full range of features can be deployed in one place.

Currently scaling to take advantage of international market opportunities, RefLIVE is currently receiving enquiries from youth soccer leagues in Japan, as well as Germany and China.

Considered to be (literally) a game changing app for the Apple smart watch, RefLIVE is
also seeing interest from AFL, Rugby Union, Rugby League and field hockey.

At the moment, the platform does not support a live back-end, and there are no real plans to distribute or commercialize the data. While live data could be pushed to a server via WiFi, a bigger obstacle is getting the refs themselves on board – even though it has the potential to enhance their on-field performance and help them with off-field administration.

Spalk

Spalk (“crowd-sourced sports commentary”) enables custom audio streaming for TV sports, via some proprietary technology to synchronise secondary content with traditional broadcasts. Due to the high costs and copyright issues associated with TV broadcast rights for professional sports (only made more complex by “over the top” platforms), Spalk is mainly licensed by broadcasters for coverage of amateur competitions.

The international basketball body, FIBA, sees an opportunity for Spalk to help drive international engagement, through the use of localised and translated commentary. However, in many cases, Spalk will need sports that retain their own D2C content rights. (Anyone familiar with the challenges of listening to overseas test matches will be aware of Guerilla Cricket, and its predecessor, Test Match Sofa.)

Part of Spalk’s “special sauce” is in integrating and synchronizing multiple audio tracks, which can provide better UX compared to social media streams and viewer posts, commentary and Tweets. Another key to success is the ability to integrate with existing broadcasting commentary technology and vendors.

SPT

Finally, SPT (sports performance tracking) is a GPS monitoring system aimed at amateur and grass-roots clubs and leagues. Offering analytics for all teams, SPT is cloud-based, multilingual and claims to be “efficient, simple, affordable”. So simple, that unlike the aforementioned Catapult, clubs don’t even need to hire sports scientists….

Currently supporting 800 clubs, and 65% of revenue coming from overseas (despite claiming to have spent only $300 on marketing), the main appeal is probably the $299 price point per device, and the core user base is amateur leagues.

SPT has so far relied on viral effects and referrals, plus an element of FOMO. While SPT may not be as sophisticated or as detailed as similar platforms used in professional sports, it has managed to demonstrate the data validation when compared to some camera-based apps. In any event, according to the founders, a 2-3% margin for error is OK for this audience. And if users can compare their own performances against those of professionals, that is an added bonus.

However, one issue facing the collection, use and sharing of sports analytics has recently surfaced in a spat between the England team manager, Gareth Southgate, and Manchester United boss, Jose Mourinho. Which may make some clubs reluctant to upload their data.

Following a tally of the judges’ votes, Spalk was declared the winner, but only by a margin of 0.25 points….

POSTCRIPT: While I think the decision to present thematic pitch nights was a good call, there are a few logistical aspects to the current series of events that the organisers need to address:

  1. Choice of venues: the room used for the sports tech pitch night had an unfortunate layout – there was a pillar right in front of the stage, which must have been off-putting for the presenters. (Also, there was only a very small screen to display the pitch deck slides, so most people in the audience wouldn’t have been able to see them.)
  2. AV tech: I’ve said this before, but organisers need to arrange for a second monitor in front of the presenters, so they don’t need to keep looking over their shoulders at their slides. And please, please check that clickers are working (or that presenters know how to use them!)
  3. Audience participation: At previous pitch nights, the MC would field questions from the audience. Now, no more. And the audience voting system (people’s choice) has gone awry. Makes it feel less engaging.

Next week: The network(ing) effect

StartupVic’s E-commerce #Pitch Night

A new venue, and a new theme – last week’s Pitch Night organised by Startup Victoria was hosted at Kensington Collective, and featured four contestants each working in different areas of e-commerce.

With some high-profile judges (including Ahmed Fahour, outgoing CEO of Australia Post, and Kate Cornick, CEO of LaunchVic), and an audience warmed by hot soup and mulled wine on a very cold and wet Melbourne night, it was not surprising that the event was packed out, despite the weather.

In addition to hearing the competing pitches, attendees were also able to meet with a number of other e-commerce startups exhibiting in “silicon alley”, including: VolStreet (a new market place for consumer goods), Liven (a loyalty program for restaurants), Buying Intelligence (data on retail trends from the fashion industry) and Straight From Farmers (a D2C platform for agricultural produce).

As per the usual practice of this blog, the startups appear in the order in which they pitched (and click on the startup names for their website links):

 Passel

Passel’s business model is built on a crowdsourced solution for same day deliveries, so that shoppers can get their purchases quicker from omnichannel retailers. According to the founders, a high percentage of online cart abandonment is due to freight costs, and delivery times.

Using something akin to the Uber model, retailers will book a delivery that could be fulfilled by one of their own staff on the way home, or by another shopper if they are in the vicinity. Same day delivery is apparently more secure, and with a registration process for delivery “agents” and no charge to the retailer until proof of delivery, Passel is also designed to de-risk the delivery service. But, not quite delivery drones across suburbia!

Currently running a limited trial at Bayside Mall in Frankston, Passel is putting most of its efforts in to training staff at the stores they work with, to make sure the process is bedded down.

The judges had a range of questions and observations about the business proposition and assumptions behind the pitch, such as: Retailing can be quite a separate function to distribution and fulfillment, and for larger retailers stock management may cover several stores, or be handled by core distribution centres – so how will shops retailers be able to match orders and deliveries on a same day basis? Within large outlets, the time taken for delivery staff to actually locate an item may become burdensome, so has Passel considered geo-coding within stores? What is the opportunity outside Australia?

My own observations about this pitch included: what are the issues with insurance, what is the fit with click’n’collect services, and is there a bigger opportunity in solving current problems with the use of contract couriers on demand?

Vesta Central

Describing itself as “a marketplace for destination partners“, Vesta Central is also one of a growing number of Product Data Distribution Platforms (PDDP), between suppliers and retailers. Essentially, it offers an API to allow manufacturers to upload their inventories to support downstream distribution and sales.

Citing technological, time and cost barriers for product suppliers and retailers to upload and distribute product data, Vesta Central’s main proposition is to help move from physical to digital, via a centralised master data platform. From here, retailers can pull product data in real-time.

I’ve seen similar startups and businesses that also provide product manuals, technical specifications and even product training to sales staff, so the judges also felt that the founders need to gain a better knowledge and understanding of the competitor landscape. Another word of advice they had for the pitch was, “Let go of the PowerPoint…”

To Me Love Me

With a tag line of “Fashion Tech – Made To Measure“, this startup is trying to address the issue of incorrectly fitting clothes which is creating retail dissatisfaction.

Using key measurements and six data points, the service develops personal profiling
based on a proprietary algorithm according to body shape and style preferences. In return, it can offer curated, personalised, and even some custom-made suggestions and recommendations – but mostly ready-to-wear brands.

Aiming to help brands bond with their customers, the service also introduces social elements via peer/customer feedback. The service provides a seamless experience and offers a level of control to customers – but essentially, it’s a data play: collecting, aggregating and distributing customer statistics and profiles to the industry.

Although the pitch mentioned a SaaS model (with three tiers of service and pricing), the economic model was not fully outlined. However, the judges were clearly impressed by the founders’ international contacts in the US, UK & Europe, and their global ambitions.

CableGeek

With one simple sales proposition (“selling trusted mobile accessories at low prices“), CableGeek aims to address three common problems in this retail product category: Inconsistent product quality, high retail mark-ups, and difficulties in buying online (especially the shipping costs on lower-price items).

The CableGeek solution includes: free shipping from Australian suppliers, offering global brands, a focus on mobile (ApplePay), and key partnerships (instant pickup via Blueshift’s IBP, and fulfillment via eStore Logistics).

With a Google customer review rating of 4.8, CableGeek must be doing something right. Asked about what sets it apart from the competition, and how it will fend off competition, the founders cited the end-to-end automation plus their own full stack development – so any challenge is more likely to come from large retailers (who don’t necessarily have the focus or the in-house technical capabilities?).

However, given that the business was started by Ryan Zhou, who is also a co-founder of CoinJar, the judges wondered whether he would be over-stretched, or unable to commit 100% to this new business – especially as in this type of retail business, the only way to succeed is by dominating market share, which requires full-time commitment.

The judges were obviously won over by To Me Love Me‘s approach, as it took out first place on the night. There was also a sense that it was the only pitch that clearly had a real eye on international opportunities, and had demonstrated some serious industry credentials.

It was also interesting that a couple of the pitches referred to issues with delivery costs in Australia, especially for smaller, lower value items – something that the incoming CEO at Australia Post might want to address?

Finally, it was disappointing that there was no opportunity for questions or input from the audience – with one of the largest turnouts ever for a regular pitch night, Startup Victoria needs to think about how to incorporate more audience participation – these events should not just be a spectator sport.

Next week: Law & Technology – when AI meets Smart Contracts…

 

Music Streaming Comes Of Age

Last Saturday was the 10th International Record Store Day, an annual event to celebrate independent music shops. A key feature is the list of exclusive and limited edition vinyl releases, most of which can only be bought in selected participating stores – in person and on the day. But there are also loads of other promotions and live events, designed to get people browsing the racks in their local retail outlet. In an age when streaming services now account for the bulk of US music industry revenues, what is the future of the neighbourhood record shop (those that are still left, that is)? Will streaming services kill off digital downloads, as well as sales of physical product like CDs and records?

Despite the sense of doom that has permeated the record industry in recent years (if not decades!), there is also a feeling that, just as the internet has not yet managed to kill off the publishing industry, digital has not yet killed the radio star. The independent music industry in particular has found a way to survive, and retail stores are still an important part of the business.

So, what are the recent trends in music industry sales and business models?

First, the continued rebound in vinyl sales (at least in the UK) show that there is renewed interest in this 70-year-old format, with industry data showing a 25-year high (but not yet a return to the 1980s’ peak). Record Store Day is generally credited with boosting vinyl sales. And to be fair, even music streaming services have contributed to this growth, through curated content, recommendation engines and user preferences: meaning that listeners get exposed to a wider range of music and artists than they would from traditional Top 40 radio, and they get to explore and discover new music.

Second, digital downloads, once seen as the industry growth engine, are facing a pincer attack, from streaming services as well as vinyl sales. No wonder that Apple is expected to slowly and quietly retire the iTunes download store, and shift more focus onto its own Apple Music subscription service. The music industry (especially the dwindling number of major labels) didn’t really “get” the internet. Having just competed in the CD-format wars, the major labels then competed on digital file formats, and tried to lock their digital content to proprietary players and software protocols. Some of this reticence was justified – thanks to digital piracy and illegal file sharing – but they didn’t (and still don’t) help themselves by poor CX on their retail websites (if they have an e-commerce presence at all), and adherence to arcane geo-blocking.

Third, many musicians are benefiting from increased exposure via streaming services – although with Apple Music and Spotify seemingly leaving the other platforms far behind, the downside risks from a dominant duopoly don’t need spelling out. Especially as the royalty payments from streaming are generally much smaller than they would have been from physical sales, “traditional” downloads and radio airplay. This source of friction between labels, their artists, music publishers and online content platforms surfaced again earlier this month, in a spat with YouTube over fees for video streaming.

Fourth, in a new move in the streaming wars and the battle to win mobile screen real-estate, Australian startup Unlockd has just secured a deal with MTV UK to stream free music videos in return for viewing ads. It’s also a move designed to counter ad-blockers and locked screens, while finding another way to distribute sponsored content. Elsewhere, some mobile carriers are now including music streaming services as part of customers’ un-metered data consumption, although what this may mean for artist royalties and the revenue share from ad-supported content on Spotify etc. is unclear.

Fifth, as another example of how the music industry is having to adapt, UK startup Secret Sessions is using a combination of social media, independent/unsigned artists and major brand licensing deals to find new ways to generate revenue streams for artists that can no longer count on income from traditional sales-based royalty deals, especially with the diminished licensing revenues from streaming services.

Sixth, as further evidence that all is not well in the world of music streaming, SoundCloud continues to lose its way. Once the music service of choice for user-contributed content created by independent and unsigned musicians, it got greedy and has been subject to recent speculation about its financial health and future.

Initially, SoundCloud was all about the makers and producers – helping artists connect with their audience, via a simple but effective website and mobile app. It also meant that at first, SoundCloud charged musicians and labels under a “pay to publish” model, while listeners could simply stream (and sometimes download) all this content for free. Then, it alienated many of its earliest supporters and champions, by introducing “ad-supported” streaming (with priority access going to labels and artists with big marketing budgets, who could also attract/demand the lion’s share of the advertising revenue).

SoundCloud also seriously messed with the app, making it far less useful to artists, and then introduced its own subscription-based streaming service, SoundCloud Go. Only, it wasn’t satisfied with just one subscription model, and recently announced an “upgrade” – whereby the “old” service became “SoundCloud Go+“, and a “new” SoundCloud Go was launched. Confused? You will be….

Meanwhile, Bandcamp continues to outperform the industry, in terms of annual sales growth, and has become a unique platform that offers music streaming, digital downloads and even physical product. (Frustratingly, Bandcamp is still blocked from selling digital content directly via iOS devices – even though much of this content is unavailable on either iTunes or Apple Music. Surely that’s anti-competitive?) And now there’s an amusing string of “SoundCloud vs Bandcamp” memes doing the rounds which may say a lot about the respective fortunes of these rival services.

Finally, the last word on the current state of music streaming and digital downloads should go to the artist known as L.Pierre. He has just announced the release of his latest and final (vinyl-only) album under that particular moniker, with an accompanying artist statement which could be seen as both an indictment upon and a requiem for the music industry.

NOTE: Apologies to my readers for any confusion regarding the timing and accessibility of this post. Thanks to WordPress, this article “missed” its scheduled time, and the outgoing e-mail notification had a faulty link. Normal service will hopefully be resumed next week…

Next week: Startup Vic’s E-commerce Pitch Night