ASIC updates – Sandbox and Crowdfunding (plus #FinTech Hub)

In recent weeks, ASIC Commissioner, John Price and his team have been making presentations to the FinTech community on two key topics: the ASIC Regulatory Sandbox, and the forthcoming Equity Crowdfunding legislation.

Image by TeeKay, sourced from Wikimedia

blogged about the sandbox when it was announced last year, and at the time, the proposed safe harbour provisions for FinTech startups were seen as being key to fostering innovation within the sector. However, at the time of the presentation I attended (June 13), there was only one confirmed participant in the sandbox scheme. According to the Commissioner, the low take-up was probably due to the timing of the regulations, being so close to summer holidays.

On the other hand, the sandbox has such a limited application, that the Government is proposing to expand its scope to include the provision of products (not just distribution), the provision of credit services, and to extend the current 12-month license waiver period to two years.

The Commissioner also mentioned the consultation process on RegTech combined with a hackathon event to be held later this year, as evidence of the direction the ASIC Innovation Hub is taking. Let’s just hope they can keep up with how fast the FinTech community (especially in blockchain and crypto-currency) is evolving, since regulation usually lags innovation.

At a separate series of FinTech and startup briefings, Mr Price discussed the new equity crowdfunding provisions, due to take effect on September 29. Currently undertaking a consultation process on the detailed regulations, the legislation applies only to ordinary shares issued by companies with a maximum of $25m in assets and annual turnover, and which become public companies once the legislation comes into force.

Eligible crowd-sourced funding companies (CSF’s) can raise a maximum of $5m per annum, and investors can invest a maximum of $10,000 per company each year. CSF’s cannot invest in other businesses or securities, and cannot have simultaneous multiple offers on participating crowdfunding platforms.

The Commissioner spoke about the temporary reporting and corporate governance concessions under the scheme: eligible public companies don’t need to have Annual Public Meetings or audited accounts for a period of 5 years; and the offer documents do not have to be as detailed as a full IPO prospectus. Whether these concessions will be enough to attract issuers, or whether the limitations prove more of a deterrent, it will be interesting to see if the new legislation meets the expectations of government, ASIC, issuers and investors.

Meanwhile, things are getting interesting for anyone following the FinTech hub story, and the perennial Melbourne-Sydney startup rivalry:

First, the Victorian government has issued an RFP for a Melbourne FinTech Hub (submissions close tomorrow…). The state government has also announced its partnership with Fintech Australia and others to host the intersekt festival, following last year’s Collab / Collide event.

Second, Melbourne’s York Butter Factory has recently announced plans to expand into Sydney. While not purely a FinTech hub, this new venture will feature the Commonwealth Bank as an anchor tenant. With former ANZ CEO Mike Smith as its Chair, YBF might also be expected to make a submission to the Victorian RFP.

Third, Sydney’s Stone & Chalk has just announced it will be opening a new FinTech hub in Melbourne. Given that a number of key Melbourne-based financial institutions (such as ANZ, NAB, AustralianSuper, Findex, Genworth and Liberty Financial) are backing this new venture, could it suggest they can’t wait for the Victorian RFP process to finish?

Next week: StartupVic’s Machine Learning / AI pitch night

 

 

Agtech Pitch Night at SproutX

Judging by some of the news coverage, last week’s pitch night showcasing successful applicants to the SproutX agtech accelerator suggests that this will be a program worth watching. (Look out for the demo day later in the year…) With an initial cohort of 11 participants, this recent addition to Melbourne’s startup scene is showing there is an audience and a market for smart farming solutions. Founded by Findex and the National Farmers Federation, SproutX also enjoys support from Ruralco and Artesian, as well as the Victorian Government.

Given the number of pitches, my comments on each startup presentation are necessarily short:

AgriLedger

This project is driving social impact by focusing on farmers in the developing world. It offers a smart phone app that helps deliver products and services direct to farmers, such as solar power facilities and micro loans, and enables them to plan better and to share equipment with other local farmers. Currently active in Papua New Guinea, Kenya and Myanmar, AgriLedger has been supported by some high-profile NGOs and attracted some impressive backers and advocates.

However, the judges felt that the pitch didn’t contain enough of the story, or explain how it actually works.

Applant

With a tag line of “aTree in your home”, Applant has come up with a novel design for a vertical gardening system that uses aeroponics. The idea is to help people “grow more with less”, and to grow food where we live, work, eat and even play. With an underlying concept for modular food systems, Applant is about to launch a Kickstarter campaign.

The judges had hoped to learn more about the customer demand and the proposed
customer subscription model.

Bloomboxco

Delivering locally sourced and farm-fresh cut flowers direct to customers, my immediate thought was “flower miles”. Launching just recently with a monthly subscription model, Bloomboxco has already attracted around 35k followers on social media (mostly Pinterest). By its own admission, the service appeals mainly to women who enjoy contemporary design and lifestyle trends.

But the judges wanted to know what makes this business different: given that the current supply model for cut flowers is built on margin, how does Bloomboxco aim to compete?

Farmgate MSU

With their mobile slaughter unit (MSU), the team from Farmgate want to “open the gate to on-farm abattoirs”. Many farms do not have access to an abattoir thanks to industry consolidation and contraction. The MSU is designed to cut production costs, minimize animal stress, and reduce waste. While still relying on central butchery services, the MSU has the potential to add value, especially for premium products, as it can operate at smaller scale. Farmgate also benefits from having a team drawn from across the meat supply chain.

For the judges, the pitch could have done more to demonstrate the capability, and to explain what happens to waste and by-products.

Farmapp

Farmapp has developed a digitized and integrated pest management solution for greenhouse crops. Using data collected from various sensors and stored in the cloud, Farmapp uses visual analysis, helping farmers to reduce their use of pesticides and increase productivity. It is currently installed in 1200 greenhouses (mainly Columbia and Kenya).

The judges wondered about the competition, as they were aware of a number of other similar solutions.

iotag

This “fitbit for cattle” uses long-range GPS monitoring to track and manage livestock health. In addition to the setup costs for network base sensors, there is a monthly subscription fee to manage data.

There were no comments from the judges, apart from the representative from the farming community, who claimed to hate subscription services.

Smart-Bait

Smart-Bait uses sensors, cognitive APIs and programmed alerts to track feral animals. Current solutions (baiting, fencing, shooting) are either unreliable, inefficient, or non-selective. Instead, Smart-Bait is leveraging IoT and AI, and can be used offline giving further flexibility. Currently conducting farm trials, the founders say that there is government interest in the data.

For their part, the judges wanted to know if there were other applications for this technology – but more importantly, they wanted to know how it actually works.

Snaptrap

This product enables remote pest monitoring and control, especially fruit fly. It retrofits to existing systems, and has established a successful proof of concept. Snaptrap is targeting research, government and industry users, appealing to both growers and the bio-security market. Another subscription-based product, the founders claim there are many use cases, and the solution is scalable.

The judges asked about the data (what happens to it), and our farm rep again queried the use of a subscription model.

Thingc

With the goal of producing “intelligent orchestrated things”, Thingc aims to reduce the number of manual tasks and alleviate animal stress in livestock management. Using the notion of precision management, it takes data from monitoring sources and applies it yield forecasting.

The judges wanted to know “where’s the tech?”, who is the competition?, and what exactly is the end game?

TieUp Farming

TieUp uses an algo-based solution to compensate for the lack of data available for yield forecasting in horticulture. The data is being made available to farmers, industry and banks, using an aggregation of different technologies. The founders claim it to be both practical and customizable, while they see significant opportunities in South East Asia.

The judges wanted to know how it actually works, and to what degree it can support traceability of produce?

Water Save

As the name suggest, Water Save is designed to reduce water and power consumption on farms. With increased concerns about water efficiency and environmental impact of run-off on the Great Barrier Reef, Water Save uses existing irrigation monitoring systems (micro weather stations, sensors) and connects them into an integrated and networked solution. The system involves set up costs, hardware costs, and subscription fees, but a key goal is to reduce the use of fertilizers – creating both economic and environmental savings.

The judges wanted to know more about the solution for linking individual sensors, and whether it has the capability to monitor nitrates.

 

For most of these 3-minute pitches, the challenge was to tell enough of the “story” while still explaining how it works – and there was a sense that the audience understood the context as well as the problem, and probably didn’t need too much background explanation. Instead, they would have appreciated learning more about the technology and the potential to succeed – i.e, “why you?”.

Farmgate MSU was declared the winner by the judges, and voted the people’s choice by the audience.

Next week: ASIC updates – Sandbox and Crowdfunding (plus #FinTech hub)

More on Purpose

Regular readers may be familiar with the name Carolyn Tate from my previous blogs on purpose, and the Slow School of Business. Last week, Carolyn launched her latest book, The Purpose Project, a distillation of the past seven years of her work, and quite possibly a road map for anyone wanting to take control of their own destiny at work.

I would describe The Purpose Project as a cross between a first aid kit for a disillusioned workforce and a survival guide for the modern workplace. But as with defining your own “purpose”, the value is in the mind of the reader, rather than in any prescriptive solution or outcome.

Having spent the past few years working with Carolyn at Slow School, I know that her views on this topic have subtly changed. Slow School itself initially appealed to, and was designed for, independent consultants (“solopreneurs”) and aspiring consultants (“corporate escapees”). But as the concept of finding purpose in our work has started to take hold, Carolyn now encourages her readers to find their own purpose where they are, rather than rushing headlong into a new job, a new company, a new career or even into entrepreneurship (which as we know, isn’t for everyone).

I first connected with Carolyn at the Slow School, when I was exploring my own purpose as an independent consultant (and sometime corporate escapee….). Slow School provides a community of like-minded souls with a “safe” space to test new ideas, a playground to kick around new concepts, and an environment to challenge our own assumptions. Unsurprisingly, a key part of The Purpose Project is a list of 50 questions designed to help readers dig deeper into their own purpose, modeled on the Japanese concept of ikigai”. There are also some tools and practices to bring purpose to life in our current work.

In my own case, I still think my purpose is a work in progress, and is never settled – much of my career has been driven by a need for new ideas and experiences, work that is intellectually stimulating, and a willingness to engage in continuous learning (while feeding an enduring curiosity and maintaining a healthy dose of skepticism). These factors, even more than formal qualifications or faddish management theories, have helped me to build resilience and navigate a rapidly changing work environment.

One point where I may disagree with Carolyn is this notion about finding purpose through staying in your current role or workplace – that it’s not necessary to leave. While I agree that it may be possible to reshape your current job to suit your personal needs and preferences, staying in an unrewarding job or remaining with an organisation that does not value you is like persevering with an unhealthy relationship.

In short, I’m quite pessimistic about the ability for large corporations and large institutions (as they are currently framed and constituted) to help us connect with our individual purpose, or even to provide the space to do so. And of course, rapid changes in the very nature of work, the way we work, the economic structures and business models that have traditionally underpinned employment and the value exchange of labour require us to take more control over where, how and with whom we choose to spend our working time.

Next week: Agtech Pitch Night at SproutX

 

 

Making an Impact at Startup Victoria’s Pitch Night

A relatively new term that was coined around the time of the GFC, “impact investing” can be seen in the same light as CSR, TBL, ethical investing and conscious capitalism, whereby businesses combine purpose with profit, underpinned by strong and open corporate governance, with the specific goal of delivering social and environmental outcomes. Not to be confused, of course, with NFPs or social enterprises.

The latest pitch night hosted by Startup Victoria, with support from impact VC investor Giant Leap Fund, presented four startups that all aspire to bring about some form of social impact, in areas such as: transport for women; gender diversity in the workplace; mental health; and training for disability support workers. (Surprisingly, there were no pitches from startups with a direct environmental impact.)

In order of appearance, the startups were (as usual, links are in the titles):

Diverse City Careers

Offering a new approach to recruitment, DCC only work with employers who meet their standards on workplace policies for women. Currently seeking $1m in investment, they claim that 50% of their candidates get shortlisted, and 25% get hired, and already have 80 accredited employers on their books.

Using an endorsement model for accredited employers, as well as standard recruitment services, DCC is able to generate both annuity and transaction revenue. By ranking employers and holding them accountable for their own policies, is able to promote best practice and establish industry benchmarks. DCC is now moving into industry and media partnerships, and plans to build a dashboard for analytics.

The panel of judges were keen to understand how DCC will maintain its point of differentiation, as well as build on its definition of diversity (e.g., transgender, transsexual and intersex). And given that there are federal initiatives already in this space, does an accreditation from DCC have as much value or impact?

Enabler

According to data provided by the presenters, around 1.9m disabled people in Australia need support workers. With the introduction of the NDIS, the number of trained helpers needs to grow from 300k to 600k, and there are currently 3,500 disability service providers to help train, recruit and employ these support workers. A key challenge is the quality of available education, with providers only spending $1,265 per worker per annum on training and development.

Enabler is seeking a $250k seed investment to launch a new product, comprising core content and training modules distributed online and delivered via mobile devices. With a focus on personalised content, Enabler is already in talks with 11 service providers and engaging with existing paying customers (who represent as few as 70 to around 1400 end users).

The key challenge I found with this pitch was the lack of explanation on why current training content and materials are proving to be so inadequate (even allowing for differences in individual learning styles). For example, what makes Enabler’s service so much better, and how will it achieve sustainable personalization in a product that needs to be both scalable and economically viable?

Shebah

This is a ride share service for women drivers and passengers (and their kids and pets), that grew out of economic and social necessity. It started life as a project on Go Fund Me, has since pivoted to Shebah, launched a mobile app, and is now available in Melbourne, Geelong, Brisbane, Gold Coast, Sydney and Sunshine Coast (with Perth, Darwin and Adelaide to follow).

Adoption among the disability community has been a notable side effect (e.g., enabling customers to get to medical appointments), and each driver gets a free consultation with a CPA about setting up an ABN etc.

Experiencing 40% growth in volume (and 100 new accredited drivers per week), the founder is asking for $500k funding to hire an in-house engineer/developer to build additional app functionality (such as pre-booking), scaling the business and growing to a minimum 1,000 rides per day. The app can already take multiple currencies, and there has been interest from Mexico, South Africa and Brazil.

With the various issues facing Uber and the gig-economy itself, the judges were naturally keen to understand how Shebah regards its own drivers (i.e., employees or freelances). For registration, tax and accounting purposes, Shebah drivers are treated as independent contract workers (sole traders), with no required minimum hours. (The founder mentioned potential plans to offer drivers share options in the business, which could prove an interesting business model.)

Despite some reasonably high-profile media coverage, Shebah has not undertaken any advertising campaigns, relying instead on general publicity and friendly ambassadors.

Asked about customer experience measures, the founder mentioned average waiting time, and driver retention as key indicators (apparently, the only 4% of Uber drivers last more than 12 months). Shebah also acknowledged that their fares are cheaper than taxis (but more expensive than Uber) with an average fare of $25, representing a margin of less than 10%

Limbr

With a tag line of “a place to be real”, Limbr is an app-based platform that is designed to take some of the stigma out of mental illness, and provide easier access to mental health services.

Despite the staggering mental health statistics, two-thirds of sufferers never seek treatment. To break down some of the barriers and overcome access issues, Limbr offers a three-tier service: a free “social network”, a personal dashboard tool, and online support from qualified mental health professionals (“listeners, coaches, therapists”). The revenue model is a combination of subscription fees and commission from provider sales, plus evidence-based public funding.

The founders recognize it’s a highly fragmented market, so therapists are interested in the referral aspect of this new channel to market. (One challenge is that the current $10 bulk bill rebate to see a therapist is not available for e-health providers.)

The app plans to use popularity to drive traction, and while the message that it’s “OK to share” is designed to be positive and encourage a healthier approach to mental illness, there was some concern that in some ways, the internet has normalised the issue. The presentation mentioned that there are 20m posts about depression on Instagram. So, isn’t social media, along with increased isolation and anti-social online behaviour part of the problem?

Asked by the judges about privacy, authentication and trust, Limbr plans to go to market via therapist advocates, and will focus on moderation and data analytics.

Based on the night’s presentation, the judges awarded Shebah first prize, and it certainly was the most engaging and rounded pitch of the four.

Next week: More on Purpose