South Florida Emerging Technologies Business Showcase Nov-2012

On 30-Nov-12 the Enterprise Development Company (EDC) had organized an event titled “Emergent Technologies Business Showcase“. It was a full-day event held at the Doubletree Hilton Hotel in Deerfield Beach. The purpose was to bring together entrepreneurs, investors, researchers and technologists for presentations and pitches by 18 regional startup companies and for general networking. This post is a personal recap and includes my notes on each company (Problem, Solution, Demo, Customers, Questions) and the lunch panel discussion.

Disclaimer: The content is not an official or complete listing; all opinions, omissions and mistakes are mine.

Emerging Technology Business Showcase (Mind Map created with iThoughtsHD on iPad)

Summary:

The 18 presentations showed the vibrant technology entrepreneurship in South Florida across industries including Healthcare, Commerce, Media & Advertising, and IT Services. Most businesses leverage the Internet, 
almost all target mobile devices (phones, tablets),
 many with social network integration (Facebook, LinkedIn) and some with location-based elements (GPS). 

Interesting use of technologies such as Microsoft Kinect (mLabs) or use of medical imaging with robotic surgery (Neocis). Some companies build on proprietary technology accumulated over many years, such as Natural Language Processing (LinguaSys), matching rules (University Research and Review) or cyber security rules (SafeMedia). The companies ranged from pre-seed stage startups to more established businesses built on decades of IP and research. The presentation format (12min pitch, 3min Q&A) worked well for this mixed audience (about 100-150 in attendance).

Although I have no experience at this, I pretended to be a VC and listened with the intent to come up with the Top 5 companies I would take a closer look at for potential investments. Most pitches of companies who wanted to raise money included financial projection spreadsheets 3-5 years out. 
I found these projections nearly totally useless, as they are basically wishful thinking souped up with some math. It reminded me of the saying: “It’s better to be approximately right than precisely wrong.” Nobody can accurately predict 3-5 years out in this market, even the size of the market opportunity itself depends on so many assumptions, not to mention the potential for successful innovations and disruptions (like the iPad). I doubt that any early stage investor will pay much attention to these numbers.
Most pitch decks also included a competitor slide with their own product being the only one with all feature checkmarks in its column. While more useful than the financials, it gives an idea as to how seriously the company is following its competitors and how it tries to differentiate itself.

In the B2C space, especially using mobile apps to provide their service, most businesses assume an exponential growth of their customer base. Everyone hopes to become the “next big thing”. Yet we know that human consumer attention is finite and only very few brands are getting some of it. As a result, attention inequality on the Internet is extremely large; a few businesses get nearly all of it and almost everyone else gets hardly any of it. 
My hunch is that, sadly, most of these approaches will never take off. The panelists stated they would consider a 10% success rate of early stage investments a respectable outcome. So which 2 of the 18 pitched here will go on to become wildly successful?

Lunch Panel: How to raise money in this economic climate?
Panelists:

• 
John Duffy, CEO 3Cinteractive
• 
Raj Kulkarni, Investor
• Richard Licursi, venVelo
• 
Casey Swercheck, Florida Growth Fund, Hamilton Lane

Questions:

What are you looking for in a startup to fund?
– team with more than an idea, already has done some tangible results
– not so much the “has been there, can do it again”, as often lots of luck involved (right time, right product)
– Angels are typically investing locally; early state investors will be interested more regionally.
– South Florida is big on life sciences
– As entrepreneur you have to expect to fail and set expectations appropriately
– 10% hit rate would be considered successful for Angel Investor!
– Entrepreneur has to be able to deal with uncertainty, to make changes and move on.

How should I think about next round after Angel to Institutional Investors?
– It’s a long dance. Especially in the Life Sciences due to long period until return.
– As entrepreneur you quickly learn to pay attention to failures and to where the money is coming in.

How do you know when it’s not getting done (i.e. time to place leadership)?
– often self-evident, but sometimes pattern of getting turned down for same reasons.
– get a good board which holds the CEO’s feet to the fire; get used to hi level of discipline.

How to arrive at the right level of valuation?
– reason #1 for investors to walk away: Valuation too high.
– can be avoided using convertible notes

What do you see in the next 12 months as growth markets in South Florida?
+ Healthcare (40%, half IT, half services)
+ IT, SaaS businesses (20%)
+ Analytics, Big Data
— less attractive Clean Tech, BioTech, LifeSciences due to FDA approval cycles.
— Institutional investors are making later stage deals, which makes angel investors more important.
– investors tend to stick to what they know, since otherwise they can’t do the due diligence.

What are usual terms for CEO?
– convertible notes could be a good way to go.
– don’t make it too complicated legally; use a template like from Y-combinator

How do you avoid dilution?
– should not be a major concern; better to own 5% of sthg very valuable than 50% of sthg worthless

Long-term implications of crowd-funding?
– good for entrepreneur, perhaps not able to raise large amounts of money.

What is a good management team?
– Have people doing what they are really good at.
– People need to be very passionate about their business and focused on execution.
– Good people management skills.
– Realistic about not having all the answers.
– CEO should know his/her own limitations.

How important is the team of co-founders? (More than one)
– very important to avoid blind spots, complement each other, have constructive discussions
– reduce risk if one founder walks away

Quotes

• “If you don’t have more than one person willing to invest, you are probably not ready.”
• “If you are likely to fail, you might as well have fun doing it.”
• 

”The most important things in a startup are: Management, Management, Management, Market.”
• “It’s going to take twice as much money and 2-3 times as much time to succeed than you think.”
• 

”Getting their (investors) money is good. Getting their feedback is often even better!”

Detailed Notes (structured for every business in Problem, Solution, Demo, Customers, Questions)

• Healthcare Industry
  • Neocis
    Industry: Medical Device Manufacturing (Robotic Surgery)
    Robotic guidance for dental implants
    Very high tech approach!
    • Problem
      Surgeons often “fly blind” when drilling for dental implants, resulting in bad fit or failures
    • Solution
      Use CT scan pre-operative,
      Same day hook up tracking arm, robotic arm creates a boundary for surgeon to work inNo manufacturing from model = no delay
      Saves time and $$$
      Relatively cheap HW install, plus implant fee ($350) and annual license fee ($10.000)
    • Demo
      Screen shots and video of system in use
    • Customers
      Big growth potential, annual $4.5b market of dental implants.
      ~1m surgeries per year.
      CT scans as enabling technology are now widely available.
      Good sales & marketing plans, reusing existing channels.
    • Q
      How large is the guide market? Only 5-10% of cases are complicated enough to need guidance.
      Why is timeframe so far out? Relatively quick for a medical device.
  • Kipu Systems
    Link:kipusystems.com
    Cloud-based electronic medical records system developed specifically for addiction treatment centers.
    • Problem
      Existing records keeping systems are often paper-based, hard to manage or search.
      Addiction treatment centers are growing in number and size; FL is a center for them.
      Rather low adoption of EMR (18% in hospitals, 38% in practices)
      Behavioral treatment incompatible with EMR workflow
      Owners a not medical doctors
    • Solution
      Intuitive interface
      Integrates medical and administrative functions
      No need for dedicated IT staff
      Always available (cloud-based)
    • Demo
      Interactive iPad interface.
    • Customers
      Treatment centers in the “neglected industries”
      Detox, substance abuse, behavioral treatment, homeless shelters, etc.
    • Q
      How does this system help with compliance (of patients)?
      – mostly helps facilities and staff, not patients directly.Isn’t a $10k setup fee too much for some small treatment centers?
      – we are willing to work with any client…
      – possibility to move towards subscription-based plansHIPPA compliant?
      – yes in practices, but not certified yet.
• Technology
  • LinguaSys
    Link:www.linguasys.com
    Brian Garr, CEO
    Natural language processing NLP
    • Problem
      Big Data (mostly text) – explosive growth
      Sentiment analysis (Twitter), often in non-English languages
      Machine-translation
    • Solution
      Translate
      Analyze
      UnderstandAny to any language possible
      Core asset = ontology built over decades
    • Demo
      Search twitter for “murder ice agent mexico”
      Semantic resolution of ambiguous words (based on ontology) + translation of Spanish tweets
      Ontology is core asset, allows to create rich models faster.
    • Customers
      Fidelity translates stock documents
      Salesforce.com uses it for marketing cloud
      Marriott
      Sweden – forensic company for governments
    • Q
      How protect IP?How comparing to statistical approaches?
  • StadsonTech
    Link:stadson.com
    • Problem
      Gap between users & Emergency Services
      Response data for police often missing
      Crime rate is increasing
    • Solution
      HELPN App – creates instant. Link between users and emergency services
      Ack GPS of app user
      Feed audio stream to operator
      Detailed user profile
    • Demo
      Screenshots of emergency services
      From 6-9 min down to 2-4 min
    • Customers
      Mostly college campus (FAU, UM Miami, etc.)
      $3.95 / month subscription per user
    • Q
      How to protect from accidental use?
      On Apple do you require jailbreaking system?
      How long for integration with campus IT? (Integrating with Azure)
      Actual customers right now? (Talking to CTO of FAU right now)
  • mLabs
    • Problem
      Interactive and gesture-based displays for shopping or general information
    • Solution
      Using Kinect controller and virtual touch screen interface
    • Demo
      Awesome Kinect video of touch-less interaction
      Interactive kiosk for real-estate agency property displays controlled by gestures based on Kinect controller.
      V Motion YouTube video showing some sort of virtual DJ rock performance playing virtual drums based on light and gesture control.
    • Customers
      Pre-seed stage. Moving into incubator next week.
      6-8 weeks away from usable products.
    • Q
      What’s main motivator for this technology?
      – it’s to increase interaction and engagement of prospects.
• Education
  • DormDuels
    • Problem
      Do online contests and have community vote on the candidates
      Banner ads are very unlikely to be clicked.
    • Solution
      Create a platform that monetizes user generated content with branded contests that combine clear brand message with a strong call to action
    • Q
      How do you protect from inappropriate content?
  • University Research and Review
    Link:gust.com/c/university_research_review_llc
    New “anti-ranking” enrollment lead service for 8000 unranked colleges, generating leads by providing individualized service to enrollees.Founder Joe Schmoke, refreshing perspective on entrepreneurs and investors.
    • Problem
      Many students change majors and/or colleges because they are not sure what they really want to major in.
      College rankings are just lists which are not personalized for the individual student.
    • Solution
      Match-making (Personal College Advisor) based on in-depth interview, college database and matching criteria.
      Suggest 3-5 schools which appear to be the best fit for potential enrollees.
    • Demo
      Target: Build an enterprise value of $100m in 5 years.
      No demo.
    • Customers
      Challenge to generate revenue.
      Licenses (like J.D.Power -> $300m/year)
      Lead Generation (like QuinStreet -> $400m/year)
      More than 15m people think about enrolling each year;
      8000 unranked colleges.
    • Q
      None
• Media / Advertising
  • Mediamplify
    Link:www.mediamplify.com
    “The media delivery platform that doesn’t need the satellite”
    • Problem
      How to deliver hidef media content without satellite spaceFor example, if you want to download a YouTube video and stream it into your organization?
    • Solution
      Use cloud-based approach;
      Mediamplify is the hub between content creator and consumer (cable companies, web, mobile)
    • Demo
    • Customers
      DMX Music -> DMX2GO
    • Q
      How to differentiate from Akamai? (Newer technology, Akamai based on obsolete technology? Bridge world between web and cable world.)
  • SafeMedia
    Link:www.safemedia.com
    Cyber Security firm, based upon very mature and established technology.
    • Problem
      How to make network and cloud secure?
      Unwanted traffic coming in from or going out to Internet.
    • Solution
      Fully integrated appliance.
      (Didn’t really describe the technology or IP much)
      Detection technologies with protocol and behavior analysis plus AI tables
      Intelligent libraries with over 48.000 rules in place, 30 years of building and IP.
      Fast analysis, attractive GUI (I have not seen it)
      Very high detection rate
    • Demo
      No demo.
      Competitors: HP tipping point, Sourcefire, McAfee
    • Customers
      LexisNexis, various universities, Emerson Electric CompanyEducation is by far the biggest market segment (73%)
    • Q
      What happens with false positives? This solution does not depend on signatures, but on behavior; this leads to lowest rate of false positives.
  • LAZO
    Link:lazosystem.com
    LAZO “Lassos” Customers
    • Problem
      When you drive by outdoor billboards, you need to remember the number and may forget before getting to call them.
      Businesses spend $4000/mo on billboard and may lose actionable prospect
    • Solution
      Use location service of smartphone to find out whee customer is and what billboard they see
      Open app on phone, it displays list of icons, when you tap on them you get details of that ad offer.
      Dynamic updates of ads are possible.Added Content Mgmt System for advertisers.
    • Demo
      Screenshots of phone app, but no demo.
    • Customers
      Companies want ads to be more social and more interactive.
      McDonalds, Verizon, Pepsi, AT&T
      ~1m billboards in the US, ~4m worldwide
    • Q
      Where is this system used and how to scale nationwide?
      – Showcase in SoFla, using ~200 billboards; launching with Staten Island ferry
      (I didn’t catch the scaling answer)