Category Archives: Startups

Level 3’s Enterprise #Pitch night

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As part of the recent Melbourne #Startup Week, IT consulting firm, Versent hosted a B2B pitch event at their product development lab, Level 3. Introduced by Thor Essman, the judges for the evening were Grant Thomson from York Butter Factory, Paul Naphtali of VC fund Rampersand, and Carl Rigoni, Head of Digital at Australia Post. It presented a very focussed cohort of enterprise solutions, that covered employee comms and engagement, design thinking and cybersecurity.

Screen Shot 2016-07-03 at 2.14.42 PMPax Republic

Pax Republic is positioned as an employee engagement platform that grew out of the founders’ background in mediation. Recognizing that organisational change programs have a high failure rate, the founders explained that lack of project or employee data isn’t the problem; it’s a shortage of actionable insights and recommendations.

The solution offers text-based content and scripted dialogue combined with AI and online facilitators. Many traditional enterprise tools don’t work, either because they don’t reduce time and cost, or they can’t scale.

When asked if AI can measure sentiment or mood, the founders explained that the system makes use of emoticons to capture employee feedback plus keystroke analysis. In terms of a commercial model, the goal is to train up internal facilitators to deliver the service, rather than getting involved with specific change management projects.

The judges felt that the pitch needed to refine the problem statement and the solution proof points, as well as explain what makes this solution different. In particular, who is the buyer? It’s also important to tell the sales story, and expand on the risk transfer and pricing benefits.

Forticode

Forticode has developed an elegant and deceptively simple password protection solution, to remove the risk and costs of password resets for their corporate clients. Basically, it can support multi-factor authentication using colour coding and a randomized keypad, incorporating character sets as well as emojis.

It can provide context aware authentication, and native protection from endpoint hacking attacks, via a plug-in architecture and 3-factor authentication, using patented technology.
According to the founders, finger prints are immutable, but still do not provide 100% identity confirmation on touch screen devices.

There were questions from the judges and the audience about alternative solutions. Compared to an IPA gateway for trust and authentication or password aggregators, Forticode offers a much more robust solution and can support machine-to-machine verification.

The sales model is to target security teams within risk and compliance departments, and price on a per user per month basis. Importantly, there is no third-party software in the stack. And, there was even an offer to introduce the founders to Auspost….

Naked Ambition

With the tag line of “Always Be Creating”, Naked Ambition is a consultancy for innovation and design thinking. Their process is to focus on future needs, help clients get closer to their customers, and in doing so, help employees to leverage customer insights. The ultimate goal is to make design thinking skills ubiquitous. Naked Ambition’s aim is to embed the teaching in the organisations they work with.

The judges questioned who exactly is the customer, and what segments do they work in? There was also some discussion whether the service was more about personal branding and intrapreneurship, rather than pure solution design.

In particular, the judges wanted to know what gives Naked Ambition the “license” to offer their services? Despite hiring a leading design thinking expert from IBM, there was a sense that there is an oversupply of similar services, and that clients are not looking for yet another program. Instead, they are thinking about “buying units of innovation” for specific projects, as and when they need them.

Konnective

Last to present was Konnective, a business I have blogged about before. In short, this is an employee messaging app for frontline staff, many of whom do not have corporate e-mail addresses, let alone access to a their own desktop computer.

As part of the product development, Konnective now offers Groups, dashboards, analysis of what’s working and employee reach. Charging a basic annual fee per employee, Konnective has clients in mining, healthcare and manufacturing. The platform supports OH&S comms, promotes shift availability that can reduce agency hiring fees, and help reach hourly employees who don’t access corporate e-mail.

The judges asked about BYOD, and the risk of/resistance to having organisational data on personal mobile phones. Plus, why Konnective and not, say Yammer or Slack? These are answers that need to be made more explicit. Finally, Konnective is still working on data analytics, and there was a suggestion of opportunities among travel companies and tour guides, but that would require some multilingual capabilities.

On the night, Forticode won the judges over and took out first prize. This was the second of these events, and I look forward to attending more in future.

Next week: Startup Victoria’s #Pitch Night for #Startup Week

Field report from Melbourne #Startup Week

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The third Melbourne #Startup Week has confirmed Startup Victoria‘s pivotal role in supporting local entrepreneurs, founders, startups and anyone interested in innovation and disruption. Over the next few posts, I will be commenting on some of the events I attended. Meanwhile, here is a brief summary of the key themes that emerged.

Screen Shot 2016-06-26 at 1.43.16 PMFirst, there is a continued shift from B2C and 2-sided markets, to B2B and enterprise solutions among the startup pitches I saw. Medtech is also getting some renewed attention, as are XaaS business models. And of course, there has to be scale in the idea.

Second, nearly all of the feedback from the judges at the pitch events centred on “why you?” –  What makes your idea different to the competition? What is the problem statement? Where are the solution proof points?

Third, there was an interesting session on “innovation from within” and the rise of intrapreneurship. There were also discussions on whether (and how) aspiring founders should leave an existing job to embark on a startup project, and how to navigate an entrepreneurial career. (More on this to follow.)

Fourth, the notion of “disruption for disruption’s sake” is being challenged – it’s not enough to be disruptive, there has to be substance (and purpose) to back it up.

Fifth, the use of design thinking, human-centred design and CX mapping in fostering creativity is breaking through to large corporations, but it is just one of many available innovation techniques – without context and framing, it can simply become a process.

Finally, I heard very little (in fact, absolutely nothing) about the role of government(s) in fostering innovation and entrepreneurship, and in supporting startup founders – notwithstanding LaunchVic, and the National Innovation & Science Agenda. Maybe there is so much election campaign fatigue that the startup community has already discounted the impact politicians (of any persuasion) can have on their business aspirations. Certainly, the numbers of Gen X and Gen Y attending some of last week’s events is testament to how engaged younger citizens are in finding purpose through the type of work they do (and what sort of organisations they work for), that they are less focussed on securing a “job”, and more concerned about building a career.

Next week: Level 3’s Enterprise Pitch night

ASIC’s new regulatory sandbox for #FinTech #startups

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Last week, ASIC published its eagerly awaited public consultation paper on the so-called FinTech regulatory sandbox. ASIC Commissioner, John Price and his colleague Mark Adams launched the paper at a special meeting of the FinTech Melbourne group, hosted by KPMG. There was also participation by FinTech Australia represented by its new CEO, Danielle Szetho, and by the Digital Finance Advisory Committee, represented by Deborah Ralston.

sandbox-295256The Commissioner was at pains to stress that, notwithstanding the developments within FinTech, and ASIC’s contribution via the Innovation Hub, the primary focus of the regulator is to “promote confident and informed consumers and investors, and to promote fair, transparent, orderly and efficient markets”.

To reiterate the point, Mr Price stressed that while the Innovation Hub is designed to help FinTech startups navigate the regulatory system, as well as reducing red tape, there should
be no compromise in ASIC’s fundamental regulatory and licensing regime.

ASIC will continue to adopt what it calls a modular approach to licensing and regulatory oversight, that includes: the ability to operate as a representative of an existing licensee; a focus on organisational competence; and the use of waivers and the “no-action” policy and decisions.

However, ASIC recognises the issues and barriers to entry that face some FinTech startups such as speed to market (a function of technology outpacing compliance?) and organisational competence (do firms need to hire in these skills and/or provide specific undertakings to that effect, or can they make use of third-party resources?). In ASIC’s view, by helping firms to reduce the time to market and to enhance their organisational competence, FinTech startups will be able to overcome the further barrier of access to capital. But there still needs to be acceptable consumer and investor outcomes, and efficient markets.

The proposals include additional guidance and discretion on organisational competence, and a limited license model that makes use of third parties as an alternative to establishing in-house organisational competence from day 1 (e.g., using an accounting firm as an external reviewer or sign-off), and limited exemptions during a defined test phase, yet still subject to some constraints to maintain a balance.

To clarify, ASIC currently exercises its discretion when assessing organisational competence based on the nature of the financial services and financial products to be offered, and the collective knowledge and skills of the people in the business. Under the proposals, the limited license will offer some additional flexibility to heavily automated business services and models, whereby the business can rely on professional third-party sign-off for compliance plans.

The sandbox exemptions will only be available to new Australian entities (to focus on startups) and only for a 6-month duration. It will be confined to certain financial services only – such as providing advice and arranging transactions. It will not include market making, and consumer protection will remain paramount. Once the limited license has expired, companies will either be instructed to cease operations, become an authorised representative of an existing licensee, or submit a full license application.

Other restrictions on the sandbox exemptions mean that applicants must be advising or dealing in liquid products (equities, managed funds and deposits), so not superannuation, insurance or derivatives. There will also be a cap on the number of investors (e.g., 100 retail clients), and on individual exposures (e.g., $10,000 per client), with an overall cap of $5m (but possibly unlimited in respect to wholesale clients?).

Participants must demonstrate they have adequate compensation arrangements, such as holding appropriate professional indemnity insurance and participating in an external dispute resolution process. They must also operate under core conduct and disclosure principles (e.g., disclosing trailing commissions).

There is some thought that sandbox participation could be “sponsored”, by third-party advisers, startup hubs or venture capital funds. This would operate on a “no liability” basis, and would primarily offer a preliminary health check of the FinTech applicant’s proposed business model. Above all, there will need to be adequate notification and reporting requirements, including a feedback process.

When comparing these proposals to what some international regulators are doing, ASIC believes they are more progressive than their counterparts. The UK is adopting a restricted licensing model, the US is using a “No action” process (more focused on credit providers?), and Singapore has recently announced a hybrid sandbox proposal.

During the Q&A session, the following issues were aired:

  • Is ASIC in favour of mandatory client recording? No, it will continue to rely on industry best practice
  • Is general insurance included in the sandbox? No, ASIC is not looking at risk-management products to be part of the exemptions.
  • If incubators and/or VC’s are able to be sandbox “sponsors”, how will ASIC deal with potential bias? ASIC says it is alert to practices such as unreasonable “fees”.
  • Would a new entity or product from an existing authorised representative be able to access the sandbox? It wasn’t clear whether this would be covered, but presumably not if it did not meet the “new business” requirement?
  • Would the sandbox be available to non-financial services co-creating products for existing AFSL holders? Again, it wasn’t clear – but if it was a new business applicant, presumably it would. (This also raised the issue of “mature” businesses using disruptive or outsourced services as a way to access the sandbox.)
  • ASIC will encourage companies to apply for a full license prior to end of the six month test, to ensure timely compliance
  • What will happen as a result of people playing in the sandbox? Clearly, ASIC has a vested self-interest in learning about and getting exposure to innovation, but it needs to demonstrate a pro-active and efficient approach.
  • What are the key criteria for the sandbox exemption? ASIC does not have a prescriptive approach (subject to the sandbox restrictions), so it will look at each application on its merits (e.g., short vs long-dated products, simple vs complex, retail clients vs wholesale), and focus on the financials, the organisational competence, and the business model. And obviously, experience counts.
  • Timing of the sandbox? ASIC hope to see it operating by the end of September (Responses to the CP260 are due in by July 22).

Subject to the consultation feedback, there seems to be general industry consensus that the sandbox proposals are to be welcomed. But there are still some grey areas, as evidenced by the Q&A, and nowhere did I here anything specifically relating to the new emerging class of programmable currencies and other digital assets, many of which are pushing the regulatory boundaries, as well as disrupting traditional markets. And with current equity crowdfunding proposals stuck in Parliament, nothing happening there either.

(For some other responses to Consultation Paper CP260, check the following articles:

http://m.smh.com.au/business/banking-and-finance/asic-to-build-fintech-startups-a-regulatory-sandbox-to-test-ideas-20160608-gpe4l7.html

http://www.financialobserver.com.au/articles/fintechs-welcome-regulatory-sandbox-proposal

http://www.fintechaustralia.org.au/#!Why-the-Fintech-Regulatory-Sandbox-is-a-Game-Changer/ll9ed/5757cd8f0cf245cf71a32089)

Next week: Customer service revisited

University Challenge – #Startup Victoria’s Student #Pitch Night

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There were around 500 people in the audience for last week’s #StartupVic University Startup Battle, which either says there was nothing better to do on a chilly Melbourne evening, or that this new Meetup format is working – or that the students of today are less interested in finding a job, and more interested in building their own career opportunities that connect with their purpose. (Our political leaders should take note….)

A sell out audience for the University Startup Battle (Image by Stefan Welack sourced from Twitter)

A sell out audience for the University Startup Battle (Image by Stefan Welack sourced from Twitter)

After a series of campus competitions, the finalists on the night were representing 6 of Victoria’s universities, and revealed a wealth of talent, ideas, innovation and inspiration. In order of appearance, the pitches were:

InternMe – (Victoria University)

With a tagline of “Experience the Experience”, this is a 2-sided market for graduate recruitment, that revealed some interesting stats about the student employment market.

Revenue is expected to come from fees for successful placements, and job advertisements. The business plans to cover work experience, internships, part-time and temporary work during study, as well as permanent and full-time roles.

Currently sourcing leads via LinkedIn and social media (notably Instagram), the founders say they may include psychometric profiling tools for better matching applicants with opportunities.

The pitch was to raise $100,000 for website development, but as the judges commented during the Q&A, the biggest challenge is engaging employers. As regular attendees to these pitch nights will recall, this mismatch or disconnect between students/graduates and employers continues to provide startup opportunities.

Printabox – (Swinburne University)

This website is designed to reduce the time, cost and complexity of ordering short-run branded boxes. Basically a self-serve model, the founders have spent $500,000 in development costs, primarily on a proprietary design tool. The resulting products come in 3 standard sizes – perhaps more customisation will become available?

The target clients are the 44,000 online stores in Australia who often need small numbers of branded boxes for sending out customer orders. But as the judges noted (based on a quick online search) there does appear to be a lot of competition. And although Printabox claims that their source code is protected, they have not applied (or are unable to apply) for a design patent.

Mech X Innovation – Project Ora – (Deakin University)

The founders have developed a hardware device that fits on standard tablet computers, and is designed to help children reduce and prevent eyesight damage caused by too much screen time, and by being too close to the device.

Essentially a Bluetooth-enabled accessory linked to an app, Ora monitors the amount of user screen time, proximity to the device and ambient lighting, and can be used in conjunction with “time outs”, scheduled messages and reminders to “go and do something else”. It can be semi-customised, so that parents can create a reward system, for example.

According to the designers, the competitor products (Appomate and samtime) are app-based only, and focus on time and distance – not lighting. Ora may also integrate with other devices, e.g. FitBit, but the target market is children and teenagers up to age 18, and their parents.

Asked about their path to market, they are planning a crowdfunding campaign. The key to adoption, though, will be via schools (who either provide or prescribe what devices pupils use) and schools suppliers (e.g., digital text books and e-learning tools).

ICallDibs – (Monash University)

This idea grew out of direct user experience, namely how can overseas students coming to Melbourne buy and sell furniture? The business is aiming to provide a market place for “Second Hand Furniture, First Class Deals”.

The biggest challenges faced by international students when buying/selling furniture are transportation, timing and finding buyers/sellers. The business will offer bundled services, including storage and removals/delivery, via partnerships.

The company aims to target international student agencies, and will ensure better matching between buyers and sellers (although they may want to consider changing the name unless they can trademark it….).

Rather than an “Ask”, the team offered a “Give” in the form of a customer discount for the evening’s attendees.

When asked about logistics and insurance, the founders clarified that the counterparts (buyer and seller) bear the direct risk. The business takes their commission upfront, then release the order details to the customers.

Assignment Hero – (Melbourne University)

It felt that this app, a collaboration tool for group work (sort of Slack for education?) was speaking to the converted, given the audience response. In short, having access to lots of different collaboration tools sounds great, but they each only do one or two things (albeit, really well). And if you use more than one app, you end up with too many tools and too many notifications.

While students may hate group assignments, they’re an important aspect of learning how to work with other people and acquiring other soft skills. They also seem to comprise a greater component of student assessments – possibly because they require less direct teacher-student face time?

Rather than build a whole new system, the founders have opted for native integration with Google Docs, plus some dashboard reporting tools (including the amount of individual input to a project).

The app is free to end users, but will generate revenue from education providers (enterprise sales) and on-demand services and commissions. When asked about existing tools like Moodle and Blackboard, the founders noted that these were designed for teaching, not collaboration.

It was also noted that existing productivity apps are not easily accessible by students (although no doubt, as with education content providers, enterprise app vendors will make student versions and pricing available). Plus, the “edtech” sector is of particular interest when linked to life-long learning, professional development and self-directed study.

Eat Up – (RMIT)

Finally, Eat Up is a social enterprise trying to address the number of school children who turn up at school without anything for lunch – estimated to be as many as 1 in 8 schoolchildren. Personally, I find this an indictment on our society – why should anyone in Australia need to go without basic food? – but the causes/reasons are far too complex to address here.

Essentially a partnership for sourcing, assembly and distribution, Eat Up has created a service model which they hope to roll out in more and more schools. They tap into the established Food Bank network for supplies, engage TAFEs to prepare the lunches, and use OzHarvest and SecondBite for logistics. There has also been support from Virgin Australia, ygap, Karma Canteen and Education Changemakers.

Eat Up aims to avoid passing on the costs to kids, parents or schools, and in part takes inspiration from another social enterprise, Thank You Water.

During a panel Q&A, the founders were asked about the apparent lack of technical skills or resources on their teams. In response, it was noted that there are many open source apps, available templates and market places for code and plugins. One founder commented that despite studying computer science, he used very little of what he learned to develop his app.

Revealing another apparent weakness in their pitches, the founders were quizzed on their respective sales models, costs of acquisition and pathway to revenue. The responses suggested that the startups risk being limited by their own inexperience, and that they each need to do more market analysis, assessment of customer willingness/ability to pay, and identify the best ways to scale their businesses.

There was also a lack of clarity around near-term goals and milestone planning.

In the end, the winner was Assignment Hero, no doubt reflecting the needs of the audience, plus the fact that the business has gained traction with some universities.

Next week: ASIC’s new regulatory sandbox for #FinTech #startups