The David and Goliath of #Startup #Pitching

Posted on June 30, 2015 by Content in Context

Anyone wanting to follow the startup scene in Melbourne will quickly discover that there are meetups, hackathons and user groups nearly every night of the week. Who needs a social life when we’ve got startup happenings to keep us entertained, busy and off the streets! The frequency and close proximity of these events can lead to some interesting contrasts; one such example came when Oxygen Ventures‘ annual splash The Big Pitch was held the same week as UpWork‘s more modest Networking & Pitch Night (part of The Pulse Meetup). It was almost a case of David and Goliath…

The biggest difference between the two events was the prize on offer – the Big Pitch offers the winners up to $5m in venture capital funding; The Pulse offers $500 in Upwork credits (and high fives all round). No doubt, the application, screening and selection process is more onerous for the former than the latter. And as was frequently pointed out once The Big Pitch gala proceedings got underway, this competition is “serious” and “adult”. But that’s not to say that the entrepreneurs pitching at The Pulse weren’t equally passionate or serious. Most of the finalists at The Big Pitch had already launched products and were gaining market traction, as had several of those presenting at The Pulse.

So, in the interest of objectivity (and pure entertainment), here are the 10 pitches I watched across the two competitions, in no particular order, with my personal comments on each. Without going to the respective websites, can you work out which startup finalists belong to which competition?

LaundryRun

Too little time, long day at work, or just can’t be bothered doing your washing? Let LaundryRun pick up your dirty clothes at a time of your choosing, and bring them back when you need them all nice and clean. Tapping into the trend for concierge services for busy inner city hipsters, hackers and hustlers, LaundryRun is joining the likes of YourGrocer to outsource domestic services.

Given that the founders already have a traditional laundry and dry-cleaning business, one assumes they know to make the economics work (they claim the customer pricing is comparable to walk-in trade). Plus they have had some early media coverage, and it makes sense to focus on higher-density neighbourhoods, especially if they can establish regular pick-up and drop-off schedules.

But the problem will be in getting enough repeat business, although if most of the collection and delivery is done in the evenings, maybe that addresses the need for consolidation (and gets round peak traffic hours).

Gamurs

As I have confessed before, gaming is not my thing. I don’t see the appeal, I barely understand the jargon, and I certainly don’t have any aesthetic appreciation for the advertising, graphics and branding that goes into these products. But I accept that it’s a big business, and that the gamers of today are possibly the software geniuses of tomorrow.

Gamurs claims to be the ultimate social network for all things gaming. It has had some user interest (probably because it is a free platform), but it felt that there was nothing really new here. Despite a dedicated team, and some impressive growth projections (albeit only for Australia) it was difficult to see where the revenue would come from as there are competing channels, and the games industry is built around platform and brand verticals.

The pitch mentioned “content consumption” a lot, but I had no idea what that meant, and I was left thinking this was simply an on-line magazine for enthusiasts and hobbyists.

EpicCatch

I’ve seen this exact same pitch before. It’s cute, and has an interesting angle on the online dating model. Sort of MeetUp meets Tinder, with a focus on curated dating experiences. But other than some neat one-liners, this presentation was really an in-person advert designed to drive customer usage.

I’m sure the business will do well among its target demographic (although not quite sure they have this totally figured out), but unsurprisingly it did not win because according to some recent research, VC’s don’t like the dating business model.

Biteable

This self-serve provider of templates for animated videos presents a very neat idea, and was established to fill the gap between expensive agency services, complicated pro tools and clunky DIY apps. It’s free to use, but for $99 you can remove the Biteable watermark.

There are limited options for changing some aspects of the template content, but maybe this will form part of the up-sell model. However, the numbers look questionable – how many repeat users would there be, and wouldn’t frequent users go for professional solutions anyway?

Perhaps there are strong niches or use cases that Biteable could explore, rather than trying to gain traction across a wide market?

CoreCool

Referring to the number of fatalities in India’s recent heat wave, CoreCool demonstrated a human need for their simple low-energy heating and cooling solution, especially for the elderly and the infirm. Using tested technology to regulate core body temperature (in essence, a contact heat exchange unit), CoreCool also sees a market in the recreational and well-being sectors.

If the product makes any claims as to its medical or health care benefits, it may need to comply with the relevant class of therapeutic goods regulations. It was not clear whether any clinical trials have been undertaken or whether the product is subject to any patents. However, there was lots of support for the idea among the audience.

Development challenges include scaling production to achieve retail pricing, and maximizing battery life.

FLEET

This was a project that proved very popular with the audience, even though it is still at concept stage – quite literally, it has not yet got off the ground. FLEET plans to bring cheap satellite internet to the estimated 60% of the world’s population that are not connected, or don’t have access.

With impressive scientific credentials, a passionate presenter and market research to back her case, it was easy to see why this pitch was many people’s favourite. But without the co-operation of incumbant telcos and their willingness to trade with a third-party platform, FLEET may struggle to establish a business case, unless they can hook into alternative distribution technology and supply chains.

At the very least, FLEET could provide a shot in the arm for Australia’s satellite industry.

Blinxel

Pitches always look better when the presenter can provide a product demo. Such was the case with Blinxel, a startup that is looking to bring simple and low-cost AR/VR video and hologram-like content to your smart phone or tablet.

Using a dedicated depth camera, Blinxel can capture video content, then upload the file via the cloud to your device. The team behind Blinxel is a bunch of enthusiastic 3-D content producers who want to disrupt the current high-cost model, which is also wasteful, as little content is recycled and OEM’s are apparently locked into proprietary technology.

I can see many uses, from education to tourism, as long as the content creation process is scalable, the need for stand-alone technologies can be minimised, and the price/speed/quality equation makes sense.

SocialStatus

Aiming straight for the marketer’s heart, SocialStatus aims to provide social media analytics on steroids – although only supporting Facebook pages at present. With a focus on peer and industry benchmarking, SocialStatus is building its expertise around the key metrics of engagement, growth and click-thru rates.

Adopting a freemium model (plus a 2-tier subscription price) and using simplified tools (canned reports and automated data from streamlined metrics), SocialStatus looks clean, easy to use and speaks directly to content marketers and community managers.

Unless they can protect their analytical IP, and extend coverage to other social media platforms, I think SocialStatus may find it difficult to defend their position.

Meet&Trip

A simple pitch: if you are travelling overseas, and want to connect with fellow travellers who might be interested in planning and sharing a road trip, this is the solution for you. Claiming that Facebook and other social networks don’t allow you to create time and location-based forums that are both moderated, curated and for a specific purpose, Meet&Trip aims to connect users with similar interests and lifestyles.

It’s a nice idea, but other than being specialist bulletin/message board, I can’t see what else Meet&Trip has planned, or how it intends to fund itself.

In the analogue world, most major cities and tourist destinations used to publish magazines dedicated to the interests of travellers, backpackers and itinerant expats. They had classified adverts of the kind: “planning a trip to Uluru; share expenses and driving; no boofheads”. Maybe this still happens? As an aside, London’s Antipodean community used to park and trade their dormobiles along the Thames Southbank – so anyone looking to buy a VW Combi and “do” Europe with like-minded travellers knew exactly where to go.

Storie

I have to admit, when I heard this pitch, my immediate reaction was, “Oh. Yet more video content that I don’t have time to watch (or care about).” And despite the apparent novelty of being able to capture, edit and share content from within the same app (i.e., build a series of scenes into a story before you hit “publish”), it felt like yet another social media pitch in search of a business solution.

Kudos to the young team for bringing their idea to our attention – but to me it felt like it was trying to take the best bits of YouTube, Vine, Instagram, Facebook and Tumblr without adding anything radically new.

As with Biteable (above), my recommendation to Storie would be to explore commercial opportunities among deep or niche content-rich markets, rather than trying to scale across shallow, thin and widely dispersed public audiences.

Conclusions

The winners in their respective competitions were SocialStatus and CoreCool, with honourable mentions for LaundryRun, FLEET and Blinxel.
We are starting to see some further variegation among startup pitches – more firmware, hardware, B2B – but the bulk are still pushing consumer-based, ad-backed products targeting the (over)crowded markets for sharing social, mobile and video content.
Reflecting Melbourne’s ethnically diverse startup scene, a significant number of these pitches were made by recent migrants to Australia.
Several pitches confined their growth potential to the domestic market – which is understandable, but self-limiting. Despite its reputation as a relatively early adopter of new technology, by and large Australia is still quite conservative, with a tendency to favour incumbant brands that operate in semi-protected duopolies and oligopolies (supermarkets, telcos, banks, newspapers, automotive).
I don’t believe in disruption for its own sake, but few of the pitches offered truly disruptive business models, other than through pricing (i.e., charge nothing and hope that advertising will cover the costs) or via self-service solutions. I would like to have seen more disruptive intent around supply chains, distribution and channels to market.

Next week: Deconstructing #Digital Obsolescence

Getting Stuck – and how to deal with it

Posted on June 23, 2015 by Content in Context

We’ve all witnessed (or even experienced) those moments when a speaker or presenter gets stuck. They stumble over their material, they offer an inappropriate response to a tricky question, or they simply go off topic and stray into verbal quicksand. And although they realise they are in difficulty, they carry on regardless, only to wade deeper and deeper into the mire. Some of our current political leaders know exactly how that feels…

Photo by Mark Roy – Licensed under Creative Commons

In my experience, many small business owners do the same thing when they get stuck. They carry on doing the same as they’ve always done, even though they know they need to change course, take another approach, or try a different tactic. Which is where someone like me comes to the rescue. As a consultant, I can bring an objective, external and independent perspective that can help clients navigate away from the problem, and steer them back onto the right track.

The Inflexion Point

The typical scenario is that the business is faltering. Most often it’s about sales and business development – either not enough new customers, or too few of the “right” customers (and too many of the “wrong” ones). Sometimes it’s about an aspect of their strategy that isn’t working. It could be a problem with their operations, such as workflow, resourcing or IT systems. Or it might be that they have lost their way and are facing some sort of external challenge. Or maybe there is a disconnect between the products and services that they offer, and what their customers actually need. Or it could be a need to recast their financial information to get a better idea of how the business is really tracking.

Whatever the issue, the common feature is a point of inflexion – the business is either stuck, has hit a plateau, or come to a fork in the road.

So, how do they get help?

The 3-Step Recovery Program

First, the client has to realise that doing the same thing won’t work, doing nothing is not an option, and they have to be open to the idea of change. They recognise that bringing in some external help will relieve the log jam (even though at this stage, they don’t know what form that help will take, or where it will come from).

Second, they do some basic research, or get a referral from their networks, on where they can get help. Much of my work comes via word-of-mouth and personal contacts, and in large part this is due to the need for trust in any consulting relationship. Sometimes, a prospective client has liked something they read in my blog, or heard something in our conversation that has clicked with their own needs. There has to be a connection or match with what the business needs, and what someone like me can offer. It’s a bit like finding a GP, financial planner or personal trainer – there has to be a fit.

Third, they are able to define a specific problem that needs addressing, or at least prioritize the issues. This requires some reflection, self-awareness, and willingness to have their assumptions challenged. There is a need for honesty, and even vulnerability, if the intervention is going to succeed.

Helping clients get back on track

I will say upfront that my services are not suited to everyone. If your business is running like a well-oiled machine, I probably can’t add much value, unless you are looking to improve an area of your operations, or embark on a new initiative where you need help in getting it off the ground. Alternatively, I may be able to help if you simply want to tap into some external perspectives to challenge your current thinking, or if you require some specific expertise that draws on my knowledge and experience. Otherwise, my role is to help clients get free of what is bogging them down.

One of my clients recently said that working with me felt like “keyhole” surgery, rather than undergoing open heart surgery. I think I know what he means, and that he meant it as a compliment….. In my experience tackling “the whole” is not always practical. Rather, zooming in on a particular aspect of the business allows for incremental change, that if applied appropriately, can have a multiplier effect. Such an approach is hopefully less disruptive, and therefore less threatening, to the existing business.

As part of my consulting work, I tend to break the business down into its component parts, look at the business model, review the revenue streams, and analyse the workflow, both internal operations and customer-facing services. For example, clients often have a slightly misplaced perception of where/how they add customer value – so, if they spend a lot of time on a particular task or activity, they naturally assume that this should form the greater part of what their customers pay for. Whereas in reality, the customers may value something else the business does, but the business has not realised that value.

It’s always important to encourage clients to develop an action plan, with specific goals, responsibilities and timelines. I’m not talking about a 50-page business plan, but a more manageable working document for the next 6, 12 or 18 months (depending on their circumstances). A key outcome of this is a list of priorities, plus agreement on which activities to wind-down or discontinue. Despite limited resources, businesses often make the mistake of trying to continue doing everything they’ve always done, plus all the new stuff – the law of physics suggests that something has to give, so they need to stop doing things that are no longer relevant, or are no longer working.

Making a Difference

When it comes to more direct business coaching, I know from the client feedback I receive that the insights I offer and the way I reframe their situation are as valuable as a re-engineered business plan. By analysing the problem, taking it apart and putting it back together again, it allows me to share my observations and offer fresh thinking – which is sometimes all the client may need to get back on track.

If you feel your own business could use some external assistance in getting back on track, or if you think you may be stuck as to what to do next, please get in touch via this blog.

Next week: The David and Goliath of #Startup #Pitching

#MedTech’s Got Talent 2015

Posted on June 16, 2015 by Content in Context

Earlier this month, the Department of Industry announced the first successful grant applicants under the Accelerating Commercialisation element of the Entrepreneurs’ Infrastructure Programme. Not surprisingly, there were a significant number of biotech projects in the list. The news came shortly after the second round of MedTech’s Got Talent (MTGT), a startup competition organised by STC and sponsored by the Victorian Government among others. The Grand Final was held at a gala event in Melbourne’s Crown Complex, and it suggests that despite some tentative beginnings, the local biotech sector is in great shape.

Based on my participation at the recent FinTech hackathon weekend, I was invited to join a team to compete at MTGT – which was both a privilege, and a huge challenge that took me out of my comfort zone, as the medical technology sector is not one I have any direct experience of (although of course I consider it to be one of the key sectors in the digital economy).

Our team, led by the exuberant Dominic Pham was presenting a new heart rate monitoring solution that combines wearables, mobile apps and cloud-based analytics. Sadly, despite a great effort by the whole team, we did not make it to the Top 5 – but it was a great experience nonetheless.

The competing teams could be classified into 3 broad categories:

Diagnostic & Predictive Tools
Rehabilitation & Spatial Monitoring
Drug delivery systems (Remote & Non-Invasive solutions)

Projects ranged from the highly ambitious (an artificial placenta) to the incredibly humble (an STI diagnostic kit aimed at developing countries). Some were using cutting edge technology (such as a new form of hearing device), others were applying new mobile and cloud-based technology to existing problems (such as digital pathology).

The 5 finalists (who now go on to an intense accelerator and investor presentation program) were:

Nuraloop
Eyenaemia
Medtasker
Pathobin
MedPro

It’s fair to say that a lot of the projects are still at the pre-clinical trial stage, and as far as I am aware, none have yet been granted TGA status, and most are yet to secure final patent grants – which reflects part of the challenge in bringing new products to market.

However, the impetus behind, and interest in, the biotech sector in general and MTGT in particular (the event brought together government, academia, clinicians, industry and investors) should mean we will be hearing a lot more about these startups in the months to come.

Finally, if anyone is interested, our own project was CardiacGuard, and is likely to launch later this year, as the underlying technology has already been developed, and some early-stage trials have been conducted in Hong Kong.

ACKNOWLEDGMENTS

My thanks to Dominic and the rest of the CardiacGuard team (Tim Liu, Celine LaTouche and Rayen Magpantay) for giving me the opportunity to experience MTGT, and to all the organisers, mentors, sponsors and supporters who made the event happen.

Next week: Getting Stuck

How to spend $60m on #Innovation and #Entrepreneurship for #Startups

Posted on June 9, 2015 by Content in Context

In the recent Victorian State Budget, the government allocated $60m over 4 years to supporting startups, via innovation and entrepreneurship. While not an insignificant sum, it’s still not a huge amount in the overall scheme of things. Having made the announcement, the government hurriedly undertook some rapid community and stakeholder consultation, to figure out how to spend the money. I was fortunate enough to be invited to one of the consultation exercises, a half-day “lightning conference“ organised by Dandalo Partners, facilitated by Collabforge, and hosted by Teamsquare co-working space.

The theme of the Lightning Conference was #StartUpFuture

At the outset, there was an assumption that whatever recommendations came out of the consultation process, a new quango would be formed to oversee the implementation of the program and distribution of the funding. I don’t think I was alone when I expressed my concern that this was rather like putting the cart before the horse – the implication being, “Why seek our opinion, views and recommendations if you’ve already decided the solution?”

To their credit, the organisers took this on board – for example, rather than creating yet another entity, maybe the funding could be facilitated by an existing body such as Startup Victoria – but it felt that the consultation exercise was at risk of “going through the motions”.

Across the various topics that were discussed in the self-forming and self-directed breakout sessions, there were probably 5 key themes:

Community
Infrastructure
Funding
Sustainability and
“Picking Winners”.

Here are the main points from each of those themes:

1. Community

There was general agreement that the local startup and entrepreneurial community is well-established, reasonably well-connected (I myself knew about 10% of the participants from various networks) and growing fast.

However, there was also a common view that more could be done to bring entrepreneurs and like-minded people together. For example, how do people know what ideas or projects everyone is working on, how can people find help or make offers of help in terms of matching skills, experience, knowledge, resources? How do we connect suppliers and investors to startups?

Sure, there are numerous meetups and regular startup events, but is there a better way to leverage this potential? And there are various matching services linking entrepreneurs to mentors, but they are rather ad hoc, and in the case of connecting startups and investors, there are probably more challenges than there are opportunities (see Funding, below).

In short, how can the community come together in a more collaborative way?

2. Infrastructure

It’s quite easy to see that Victoria (mainly Melbourne) has a vibrant startup ecosystem, simply based on the number and frequency of meetup events, founder workshops and hackathons. But there still appear to be numerous obstacles to getting started – from establishment costs and bureaucratic red tape, to tax impediments and access to funding.

Some of these challenges are being addressed at Federal level (e.g., streamlining the company registration process, tax cuts for SMEs, and changes to both equity crowdfunding and employee share schemes). But that’s part of the challenge in itself – at the individual State level, there is relatively little that can be done on fiscal policy (apart from payroll tax and land tax), and all reforms relating to securities financing need Federal legislation and the involvement of market regulators.

The State government has more autonomy around local industry policy settings and planning, as well as making funding available via grants. This means, though, that government is forced to prioritize one sector over another (see “Picking Winners”, below), and a system of grants often results in a mini-industry that is created around grant applications, awards and distribution.

At a practical level, some participants took the view that more could be done to facilitate early stage startups and product prototyping – such as a continuous education and open-enrollment program for entrepreneurs, and co-working spaces for small-scale manufacturing, materials-testing, and engineering. (I am aware of at least a couple of local projects in this space – a biotech co-working lab and an “Internet of Things” open access workshop).

If the State government is looking to plug a gap, investing in R&D facilities might be one option.

3. Funding

This remains the biggie – and a topic previously covered both in this blog, and via numerous commentators and advisers. Even though there are many local pitch competitions, incubators and accelerator programs (plus Shark Tank and That Startup Show make for interesting/amusing viewing…) the elephant in the room is that there are too many startups chasing too few investors.

Competition for resources is positive, as long as it’s an efficient, transparent and accessible market, where the laws of supply and demand are equitable and the rules of engagement are clearly understood.

One industry veteran noted that the local investor community can normally provide small-scale startup funding up to $5m (via “family, friends and fools” and angel backers), and even larger, early-stage equity funding over $50m (via Venture Capital, Private Equity and Family Offices). But in the $5m-$50m range there are far fewer options.

Leaving aside the pros and cons of traditional secured and unsecured bank lending and emerging P2P lending platforms, there is a funding gap that could be filled via Australia’s superannuation scheme:

First, we need to find ways to get large retail and industry super funds along with other institutional investors to invest directly in local startups. At present, thanks to the Silicon Valley effect, these instos are more comfortable handing their money to US-based fund managers who then charge a premium to invest the assets in local startups. (I call this a very expensive boomerang….)
Second, in the absence of suitable investments for retail investors who may want to allocate part of their portfolio to startup opportunities, part of their superannuation assets could be used to invest in early-stage startups via a form of savings products or fixed income bonds. The retail bond market (such as it is) is heavily skewed towards sovereign debt (treasury bonds) and bonds issued by financial institutions (often in the form of hybrid securities, which are essentially a form of deferred equity). There have been attempts (and even regulatory reforms) to encourage the development of a deeper retail bond market in Australia, but these efforts appear to have stalled.

An enlightened approach to asset allocation could direct even a very small part of the $1.8tn superannation savings into startups that could have significant outcomes. If SMEs are seen as the backbone of future economic activity and jobs (as well as innovation and entrepreneurship), helping to accelerate startup growth will deliver multiple long-term dividends.

4. Sustainability

This wasn’t a huge topic of discussion, but it deserves an honourable mention because it surfaced in several ways:

Economic (e.g., making better use of available resources, not funding startups that go nowhere etc.)
Social impact (e.g., the growth of social enterprises)
Environmental (e.g., the conscious capitalism movement and the importance of “for purpose” enterprises such as B-Corps that want to minimize their environmental footprint)
Government (e.g., how to foster startups that want to help deliver better public services, and how to change public sector procurement policies that give startups more of a look-in)

There is also a need to reflect the changing demographics of the workplace, so that sustainable employment opportunities (in whatever form they exist) are made available to both mature-age workers and new school leavers.

So perhaps part of the $60m could be put towards (re)training initiatives.

5. “Picking Winners”

First up, let me say I always get nervous when we put our elected representatives in charge of deciding the fate of specific industries, especially when it’s taxpayers’ money at risk. Call me a cynic, but I’m not sure that picking winners is the government’s forte. I understand the need to support certain sectors that contribute to GDP growth, create employment opportunities, generate taxable revenue, instil industry innovation and develop cutting-edge technology – but the example of the domestic automotive industry is one where political ideology probably got the better of sound economics, as public subsidies eventually came to look like throwing good money after bad.

If nothing else, picking or backing winners is fraught with problems of favouritism, lobbying, murky back room deals and “jobs for the boys”. Better to create the foundations upon which broader innovation and entrepreneurship can thrive, and let the market decide. That way, the government can still claim the credit, and frame the conversation around its role as an enabler.

On the day, the discussion was more about the long lead time before anyone would know whether the program had been successful (assuming we can agree on what success should look like). In reality, re-tooling innovation and entrepreneurship is a 10-year initiative (which is difficult to manage in the face of short-term policy settings linked to 3 and 4-year election cycles).

Should we teach entrepreneurship and innovation in schools (alongside coding and STEM subjects)?
Should government use local plebiscites to determine where/when/how the funding should be allocated?
Should we use the money to directly fund startup founders (rather like the UK’s enterprise allowance scheme in the 1980s)?

There was also a suggestion that the money could be used to promote local startup success stories, in order to foster an understanding of truly viable startups, to identify and fast-track high-potential entrepreneurs, as well as define what is takes (time, money, resources, networking and connections) to build scalable and sustainable startup businesses (i.e., companies generating $250m+ in revenue, not lifestyle ventures or small family owned concerns).

If we do need to pick winners, perhaps we can easily agree which ones they are based on current trends, future needs and demographic demands:

Health, biotech and medtech
Fintech and big data analytics
Education and lifelong learning
Renewables and green technologies
High-tech engineering and manufacturing

In which case, we should simply help the State government prepare an investor profile, set an optimum portfolio performance target (based on financial returns, innovation scores and a mix of social and environmental outcomes) and give the $60m to a skilled fund manager.

FOOTNOTE:

For further ideas, please see 10 Random Ideas…

POSTSCRIPT:

A couple of further contributions to the innovation debate from AVCAL around tax reform, and from OneVentures around superannuation allocation.

Next week: Medtech’s Got Talent

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