Final StartupVic Pitch Night of 2016

Posted on December 13, 2016 by Content in Context

There was something of a festive mood in the room for StartupVic‘s final pitch night of 2016, hosted at inspire9. It certainly had an end of term feel, as a number of the long-term Startup Vic team members said their farewells before moving on to new ventures. So it will be interesting to see how these monthly events continue to evolve in 2017.

Continuing the theme of recent pitch nights, diversity was the key – this month’s startup hopefuls came from the energy, AI, environmental and consumer sectors. As usual, I will comment on each pitch in the order that they presented:

BioFuel Innovations

With the simple aim of turning waste into fuel, BioFuel Innovations uses an enzyme, as opposed to a more caustic chemical catalyst, to convert used cooking oil from restaurant kitchens into biodiesel. Given this greener and more sustainable process, the company can use lower quality feedstock, consume less energy and reduce the amount of waste water.

Having built a pilot plant in Dandenong, the founders are currently developing a containerised “turnkey solution” comprising a pilot micro-refinery, which can be financed by 3rd party lenders (a bit like some solar energy schemes). However, they are seeking funding to gain access to a startup accelerator program.

With a number of existing service providers that collect used cooking oil from restaurants and food processing plants, BioFuel Innovations only plan to produce their own fuel on a small scale. Rather, their business model is to sell micro-refineries for biodiesel production.

Asked by the judges why they are focusing on biodiesel rather than other higher-yield fuels, the team pointed out that some of those products require high temperature processing, and therefore consume more energy. Also, in concentrating on this type of biodiesel production, the founders believe they are helping to solve the problem of disposing of waste oils. However, longer term, they may explore even more sustainable energy derivatives and regeneratives. And in Asia Pacific, for example, there is a need to re-process palm oil residues.

Finally, a key to their success will be streamlined manufacturing processes and logistics, such as building supply chain partnerships for the shipping containers that hold the micro-refineries.

Breathable

This is an environmental design concept that aims to use plants to replace air ventilation systems in offices and homes. Based on research from Maastricht University in the Netherlands, Breathable uses an algorithm based design solution. Taking into account the building dimensions, natural light, air flow, number of people, amount of mechanical and electrical equipment, etc., the team can design the right combination and layout of plants for each given location.

Established as a bootstrapped social enterprise, whose profits go to helping asthma sufferers and patients with respiratory complaints, Breathable is hoping to make a large and sustainable impact.

The first question from the judges was, why set up in Australia? The team explained that given certain plants are not allowed here, the underlying algorithm has to be reconfigured for native plants, by a local team.

This was a very timely comment, given the recent episode of “thunderstorm asthma” in Melbourne. However, the judges were a little concerned that while there was a clear connection between purpose and passion, they wondered whether it is more of a lifestyle business for the founders, especially as thus far, no IP has been registered or protected. (On this specific point, the team simply said, “we challenge people to do it better”.)

There is an expansion plan, to develop fully self-sustaining eco-systems – such as using plants to power lights that help generate photosynthesis. But big goals need big marketing budgets, and with an active waiting list of 20 corporate clients, the challenge for the business is in how to scale.

MagicPi

I should say upfront that based on what I had read in advance on their website, this pitch was not what I had expected. Instead of a presentation on artificial intelligence, we got a pitch about Australia’s Chinese tourism “problem”. Namely that, based on a 2016 report from Bloomberg, by 2020 Australia will host 5 million Chinese visitors a year, representing a $13bn market. (And as I know from having worked with the founders at China Digital, many tourist destinations in Australia are far from China ready.)

Using natural language AI (cognitive, cloud, machine learning – “Siri with a human touch”) MagicPi is targeting Destination Marketing Organisations (conventions, conferences, local tourism boards). They plan to create content and solutions for client websites, and then take a commission on bookings. With a presence on both WeChat (including a voice recognition bot) and AliPay, MagicPi has a long-term vision of being the “intelligent interface for everything”.

However, the judges questioned whether the solution works or even exists. They felt that there was currently no visibility for investors or consumers. Claiming to have built a demo app, the team stated that there is a lack of quality information for Chinese tourists, and people are willing to pay for premium content – and to distinguish mere “recommendations” from the visitor “reality”.

Despite adopting a deliberate enterprise solution, the judges felt that the pitch needed to stress the “why”, rather than focusing on the problem.

The Cider Link

I should mention that I first met the team from The Cider Link about a year ago, and was intrigued by their mission to build an online craft cider market that connects makers with customers. (So much so, that I connected them to local wine producer, Richard Stockman, who invited them to appear as guests on his weekly food and drink radio program.)

The Cider Link is challenging both the market duopoly for cider retailing, and the ubiquity of “commercial” cider, much of which is produced from bulk juice mixed with alcohol – rather than being fomented from freshly pressed fruit, as is the case with craft ciders.

Cider is currently enjoying 10% annual growth by volume (based on bottle shop sales alone). So, online, cider and craft are all “on trend”. The founders have built a commission-based market place, and with connections to producers who are members of industry body Cider Australia, The Cider Link is also appearing at festivals and related events.

In the Q&A with judges, the team explained that success for them would be sales of 1000 cases a month, making it a $1m business. They also plan to take the model to the UK, which has the largest cider market in the world.

In addition to attracting more customers, the founders are seeking investment to improve sales conversions and support some advertising.

Given the mix of pitches, and the range of business models and sectors, based on judging criteria and audience votes, the winner was Breathable.

Next week: End of Year Reflection

Summing up the #FinTech summit

Posted on November 22, 2016 by Content in Context

Coinciding with the launch of the inaugural EY FinTech Australia Census 2016*, FinTech Australia’s first industry summit Collab/Collide was a major beneficiary of the initial round of funding from the Victorian government’s LaunchVic program. The summit provided a useful opportunity to survey the global landscape, to compare notes and of course, to network. But did we learn anything new?

The summit was programmed around key FinTech themes of payment services, alternative funding, robo-advice, Blockchain, data and regulation. Participation by some key industry figures from Asia, Europe and the USA (both founders and investors) also provided some international perspective.

While Australia appears to be maintaining a top 5 position in the global FinTech rankings, our focus on things like P2P lending, payments and robo-advice risks losing sight of bigger opportunities in Blockchain assets, enterprise solutions and institutional services.

And although it was good to see a team from the Treasury Corporation of Victoria in the audience, as well some of their colleagues from DEDJTR, it was surprising that there was hardly any representation from among institutional investors (superannuation funds, asset managers, insurance industry), major financial institutions, or the traditional financial markets (exchanges, intermediaries, brokers, vendors)**.

Some of the best sessions were the comparative panels on Blockchain, regulation and funding. In particular, there was an interesting discussion on whether Australia should be worried or concerned about UK opportunities post-Brexit, or focus more on Asian markets. But with the development of reciprocal financial licensing arrangements between Australia and the UK, and Australia and Singapore (and between the UK and Singapore), ASIC is clearly trying to engage with both markets.

The Federal Treasurer, Scott Morrison also took time out of his busy schedule to address the audience on the topic of Open Banking Standards, following on from the Productivity Commission’s Draft Report on Data Availability and Use. The overall goal is to have a system of FinTech data and operating standards that is “regulatory match fit”, that delivers frictionless inter-party transactions and enhanced industry participation and collaboration. For example: once the New Payment Platform launches in 2017, we should have more open access to transaction data; the ATO is implementing a “single-touch” payroll process; and ASIC is due to publish recommendations for the financial services Regulatory Sandbox by the end of 2016.

Unfortunately, given the changes in venue and content, the program struggled to stretch to a second full day, as audience numbers dwindled. Something for the organisers to think about next time? I would also advocate organising specific sessions, e.g., for B2B and B2C, or for vendors and institutions.

Finally, speaking to a member of the DEDJTR team, there is a clear desire on the part of the State government that the FinTech community will come together along with other market participants to figure out how to scale this emerging sector. In other words, how to turn the growing number of FinTech startups (often with directly competing products and services), hubs, incubators, accelerators and VC funds into a sustainable industry?

* For a handy summary of the EY survey, check out Lucinda de Jong’s blog for Timelio

** In the interests of full disclosure, a FinTech startup I work with, Brave New Coin (a market data vendor for Blockchain assets) was a Strategic Partner for the Summit

Next week: The Startup of Me v2.0

StartupVic’s #Pitch Night for October

Posted on November 8, 2016 by Content in Context

The crowds are getting bigger, the list of sponsors is getting longer, there’s a new logo, and they’ve even managed to (sort of) fix the PA system. The Startup Victoria monthly pitch night is now a firm fixture on Melbourne’s Meetup calendar…

Image sourced from Startup Vic’s Meetup page (Photo by Daniel)

As usual, there were 4 startup pitches, and I’ll comment on each in order of their presentations:

Next Address

This Ballarat-based startup has built a P2P website that offers “direct to market” property sales, removing the need for traditional estate agents. Recognising that the real estate sector is still ripe for some digital disruption, Next Address is challenging the commission-based fees and cost++ price markup on services that many estate agents charge their clients.

They have established an affiliate programme, and generated some positive media coverage, but have yet to complete any sales. Charging a fee of around $549 to vendors (there is a sliding scale), compared to similar competitors priced at between $800 and $2,000, Next Address is also offering a Facebook package.

I think it’s fair to say that this pitch did not come across as one of the strongest or most compelling presentations at these pitch nights (possibly due to some stage nerves?). There were also questions among people I spoke to about market traction, the customer acquisition model and the conversion process.

Given that there is a lot of competition within real estate listings and aggregation (often backed by major media companies), and given that many vendors still prefer to use the auction process, it was difficult to see how Next Address can cut through, unless they focus on a point of differentiation: geographic market, property type, price range, marketing support or add-on services.

However, the founders must be doing something right, as on the night they managed to attract the attention of a senior executive from a well-known real estate listings website.

DragonBill

DragonBill is an invoicing and remittance solution aimed at sole traders and micro businesses, which has featured in this blog before. The focus is on helping clients manage their cashflow and providing them with a level of financial literacy and education.

Since launching, DragonBill has found a substantial niche market among sporting clubs and associations, in large part because 50% of club members are also SME owners. They are continuing to build partnerships with accountants and are now starting to market themselves via co-working spaces.

Further ahead, there are plans to build some sort of superannuation offering, given that many SME owners and sole traders may not be making sufficient contributions to their personal funds. There are also regulatory changes in payroll administration following the roll out of SuperStream by the ATO.

The judges were interested to know what plans DragonBill has for international growth, and whether the platform can output financial and tax reporting for accounting purposes – both of which are under consideration. Meanwhile, DragonBill was recently shortlisted for an award by VISA.

Spee3d

In short, this business supports “3-D printing of metals at production speeds“. Using a proprietary “Lightspee3d” technology, the goal is to offer a low-cost, high-speed solution for full-scale production output, not just prototypes and medical devices. Primarily manufacturing in copper and aluminium 6061, current output is 100g/minute ( expecting to soon reach 250g/minute), and the maximum size is 300mm x 300mm x 300mm.

For the technically minded, the additive process is described as something like “bugs hitting a windshield”. It does not use any gasses, and deploys a “line of sight” process, meaning that some hollow objects are possible. The business has picked up a Bosch Venture Award.

Targeting products traditionally fabricated by sand casting, Spee3d is working with clients who have a preference for low-cost powders, initially within the university market, then the auto industry. They are also aiming at new products, and not parts manufactured from existing casts that have associated sunk costs. There was quite a lot of excitement around this pitch, judging by the number of questions it prompted.

Foddies

This startup is launching a fructose friendly food business, offering products, recipes and outlets (shops, cafes, catering) that can also appeal to people with other food allergies and dietary requirements. If, like me, you were unaware of the “Low FODMAP” diet,
it was researched and created in Melbourne (Monash Uni), and from my initial reading, it has some similarities with diets designed for people needing gluten-free, lactose free and low GI solutions.

Admittedly not the first to market, Foddies claims to be the first to develop a holistic solution, which includes a wholesale strategy for ready-made meals, a cafe franchise and an online store. Next, they plan to work with airlines and hospitals. Although building on their social media engagement, the biggest challenge, when asked by the judges, was the lack of public awareness or education on the Low FODMAP model.

From a personal perspective, I appreciate the importance of helping people with food allergies or intolerance to manage their condition through appropriate diet. But I can’t be alone in thinking that the higher reported incidence of these complaints may be due to multiple factors such as the increased use of chemicals in the environment (especially food production), the lower resistance in our immune systems caused by too many antibiotics, and our over-reliance on certain strains and varieties of crops. More research is called for.

So, after a very mixed bag of startup pitches, the winner was Spee3d, based on the audience and panel voting.

Next week: Richmond 3121

Bridging the Digital Divide

Posted on October 18, 2016 by Content in Context

Is there still a digital divide in Australia? If so, how do we bridge that gap? If not, how do we address the apparent chasm that is leaving some “digital have-nots” behind? Is it as simple as rolling out the National Broadband Network and equipping every school child with their own tablet device? Or is it also about creating a digital mindset to ensure everyone can take advantage of the educational, social and economic opportunities that the range of digital technologies has to offer?

Mobile phone internet usage is projected to keep growing. Source: Statista

Based on consumer research, we would appear to be a well-connected country, with a high concentration of PC, smart phone and tablet devices, if data from Roy Morgan is any indicator. However, some recent research by Scott Ewing of Swinburne University based on ABS data has suggested that despite the narrowing of the divide, there is a deeper disconnect among those who do not have internet access.

There are multiple factors contributing to this disconnect: socio-economic, age, location and education. I would expect that within 5-10 years, age will be a far less relevant factor in who does or doesn’t have access to the internet. You could also argue that with more people accessing the internet via mobile devices, and with the increasing number of free WiFi zones across our cities (cafes, shopping centres, office buildings), public institutions (libraries, museums and galleries) and transport infrastructure (plus the reducing price of data and storage), cost may not be as much of an issue either. And once the NBN is complete, the percentage of the population without physical access to the internet should likewise be much smaller.

So that leaves education – according to the ABS-derived data, the more educated you are, the more likely you are to access the internet. Should this infer that we aren’t doing enough to teach digital skills in the classroom? Or are we teaching the wrong set of skills? Or is it a bit like learning English grammar or applied mathematics – unless you use them in your everyday life, you soon forget them, and never remember why it was important to learn them in first place?

Computer science, programming and coding courses are increasingly being taught in schools, either as part of the core syllabus or as extra-curricular activities. Many pupils have to use tablets as an integral part of their school lessons. And some schools are also running hackathons and entrepreneurial projects to help students navigate the new world of work shaped by innovation, digital disruption and the “gig” economy.

The changing nature of work is challenging schools and parents to think about how we should be preparing pupils for the future. It’s not just learning about the technology (important as it is to study data analytics, automation, robotics, AI etc.), it’s also about understanding the context and the potential for what it can do. It’s also increasingly apparent that more and more of today’s students want to do work that is meaningful, rewarding, challenging and which helps connect them to their values and “purpose”.

I like to think that as part of a well-rounded liberal education, today’s pupils will receive:

a solid grounding in digital literacy (as important and as vital as the 3 R’s)
an awareness of how “digital displacement” (through automation etc.) may impact their chosen career path (even in ways which we cannot yet predict – we must assume it will happen, as no profession, trade or vocation will be totally immune)
an appetite for lifelong learning (as one of the ways to cope with the inevitable changes they will face)
a set of life skills that instill self-awareness, curiosity, resilience, empathy, flexibility and adaptability.

Finally, if we are to truly grasp why this ability to adapt and change is important, we only need look beyond the digital debate and ask why the National Innovation and Science Agenda is failing to cut through. In large part, the NISA message failed to connect with the general electorate because many people could not identify with it, and therefore it did not resonate with them. Just as “necessity is the parent of invention”, so adversity often needs to be the catalyst for embracing change.

Notwithstanding the economic, environmental and societal challenges we face, there is considerable complacency and acceptance that “she’ll be right” – especially within the political, institutional and corporate elites that claim to lead us. As long as so few of the main actors among these bastions of power and influence decline to change their own culture, behaviours and ways of doing business, then it’s not surprising that the public feels unwilling or unable to change.

So our only real hope is to empower the next generations to shape their own future, not to be constrained by our traditional notions of “job” (in my view, an increasingly outmoded economic unit of value….) and think for themselves as to what change they want to create with all the technology, resources and opportunities at their disposal.

Next week: My Extended Gap Year

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