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As we continue to cover the bitcoin space, two things happened this week that seem worth discussing in more detail: Korbit raises $3MKorbit, a South Korean-based bitcoin exchange, wallet, and merchant payment solution, got $3M in a Series A financing. As I mentioned last week, we’re still seeing how bitcoin companies will breakdown between international conglomerates and local power players, and this is just another piece in that puzzle.Another interesting component of the Korbit raise is that SoftBank Ventures Korea (SBVK) was one of the investors. Calling South Korean venture investors conservative might be the understatement of the year. And who can blame them when the startup scene there is so nascent? But I think this deal does a good job of (a) generally showing the acceptance of bitcoin and (b) specifically showing the foresight of SBVK in seeding the creation of a Korean startup ecosystem. North Carolina believes they already have the authority to regulate bitcoinIn contrast to New York, which is looking to develop new regulations to handle crypto-currencies, North Carolina authorities believe they already have the regulations they need, and might just simply offer clarifying guidance. I think this shows how regulatory agencies are slowly developing a better understanding of bitcoin and how it’s currently being used as a currency. If I’m moving something around that has value, be it dollars, pork bellies, or bitcoin, the government has some ability to regulate those transactions. Now, obviously it’s fair game to debate how smart or effective those regulations are, but the mere fact of having regulations on bitcoin shouldn’t surprise anyone.Read More
Recently I've noticed a growing number of IoT startups raising a lot of money very quickly on kickstarter and indiegogo. Skully Helmets raised more than $1M in a day and still growing, Sense raised more than $2M, and JIBO just surpassed $1.8M, just to name a few (all figures at the time of writing this post).
We live in the era of “now” – almost instant access to almost anything. Need to settle an argument with a friend at dinner? No problem, I can lookup the information and have an answer before the entree is served. Need a new pair of running shoes? Easy, I can order the exact color combination and size after just a few clicks.As a relevant Wired article notes, anyone under the age of 25 has grown up with “instant knowledge” and “instant buying,” and that Millennial as as a generation are becoming increasingly impatient. In fact, the article notes that psychologists have called this phenomenon “delayed discounting,” where we discount our overall gratification by getting something now. As explained in the article: “The more we get rewarded by delay discounting the more we like it. It becomes a treadmill where we need more and more instant gratification.”Instant gratification has powerful effects, influencing decisions and causing changes in the way we normally operate. This effect is seen in the business world, where both online and offline retailers understand this power and have implemented practices to satisfy consumers as quickly as possible.Key e-Commerce players are moves in this space. Amazon recently announced that it would be expanding their same day delivery service to six new cities. The company wants to reduce the delivery lag and target goods normally available at local super centers. Google is testing its Google Shopping Express service, hiring drivers to make local deliveries of household goods. eBay also launched eBay Now, a service to facilitate same day deliveries from local stores in over 25 cities. We also see numerous startups, some very well funded, that are tackling this space:· Instacart — $54.8M raised· Postmates – $23M raised· Deliv — $12.4M raised· Zipments — $2.25M raisedLast week, the Hong Kong-based van-on-demand service GoGoVan raised a $6.5M series A to expand to Asia, and Uber, the black car app, announced a pilot test to make same day grocery deliveries.While this space has grown predominantly due to growing demand in e-commerce, physical brick and mortar retailers have also been taking similar approaches to enhance their omni-channel strategy. Target, Walmart, and Kohl’s are testing, or have recently implemented, a Buy Online Pick-up In Store (BOPIS) strategy in order to reduce delivery lag and take advantage of existing overhead.Lets also not forget that sustainability could be a long-term concern. While merchants and other large companies can afford to subsidize costs right now, it is reasonable to expect that they will eventually be passed on to the customer. Delivery services like Postmates already tack on additional fees, so it will be interesting to see how this space continues to grow. Nonetheless, there seems to be a strong demand due to our evolving expectations of faster service and I am curious to see how merchants will continue to play into this desire.Read More
External company evaluations and scores can help buyers and dealmakers narrow the field when assessing vendors or deal prospects, especially as the pool of available opportunities only grows.I see 3 approaches being used, and will offer my thoughts on each method below:Analyst evaluationCrowd evaluationProgrammatic evaluation1) Analyst evaluations are the bailiwick of research shops whose analysts look at a sector and use a specific evaluation rubric to classify companies. For example, Gartner uses the magic quadrant methodology, where analysts evaluate companies based on completeness of vision on the X-axis and the ability to execute on the Y-axis. They then group companies into leaders, challengers, niche players, or visionaries (see figure below).Pros: Analysts conduct primary research, talk to companies, and dig through operational details to synthesize a large amount of non-public data to form opinions.Cons: Analyst evaluations can be subjective and biased based on the relationship a vendor has with the analyst and can also be very limited as analysts do not have the bandwidth to cover all the up and coming entrants in any given sector. 2) Crowd evaluations use the power of the open web to enable the wisdom of the crowds to score individual companies. For example, ProductHunt uses a simple Reddit like model that allows their community to list and up-vote companies. Companies receiving the lion’s share of up-votes in any given sector are the presumed leaders in a particular sector.Pros: Crowd evaluations democratize scoring and can signal which companies have a high likelihood of pleasing customers. Cons: Crowd evaluations are broad in nature and don’t determine the fit of a company against specific customer needs, nor do they evaluate a company based on their operations and strategy.3) Programmatic evaluations use algorithms that take in available data from the web to determine an overall score for a particular company. For example, Mattermark uses week-to-week growth data on a company’s web traffic, mobile downloads, inbound links, Twitter followers, Facebook page likes, and LinkedIn followers to arrive at an overall score for the company.Pros: Programmatic approaches that leverage available public data can be a good signal for companies that are showing growth and can help buyers and investors find up and coming opportunities.Cons: The flip side is that programmatic approaches can favor socially trending companies versus companies that have a stable offering and an existing base of customers. Furthermore, they do not evaluate companies based on any specific customer needs, nor do they take into account a company’s overalls strategy and ability to execute.Ultimately, each of these approaches provides part of the solution, and at Venture Scanner we believe the final answer lies at the intersection of all these approaches. Our approach of “analyst coverage as a service” combines a sector analyst’s primary research with aggregated and synthesized data from the web to provide our customers with the necessary insights to make a decision. Are there other approaches or pros/cons that I’m missing?NaderRead More
Everyone knows that key features for bitcoin include the blockchain and public ledger. People know they can utilize these functions to glean market insights or develop whole new applications, but it was mostly theoretical given the huge learning curve to understand how to parse the data. But, some recent news this week might show how that is all changing.The first item was the acquisition of Blockr.io by Coinbase. Blockr.io provides data and analysis on a whole variety of crypto-currency blockchains, from bitcoin to Megacoin. Users can dig through a block, search for specific addresses, or view handy charts. I suspect that Coinbase believes that a better understanding of the blockchain will be paramount moving forward, and as they stated on their website “Blockr.io parses the bitcoin blockchain and presents the data to users in an easy to read way”.Taking this a step further is the company Chain, which is looking to build an easy-to-use API on top of the bitcoin blockchain, making it easier for others to quickly develop new products. I kind of think of them as a sort of Platform-as-a-Service (PaaS), standardizing the repeatable tasks in the “guts” of the protocol, and enabling others to focus on their specific applications. The big news for them this week is that they raised a $9.5M Series A, bringing their total funding to $13.7M. Negotiating deals like these obviously take time, so I’m sure both of them happening within the same week is somewhat of a coincidence. But, I think they’re indicative of a growing interest towards moving bitcoin beyond being just a currency.Taking a step back, it’s important to remember that the fundamental problem solved by bitcoin is how to create trust in a trustless system (sometimes referred to as the Byzantine Generals’ or Two Generals’ problem). And a better understanding and organization of the blockchain is the first step in developing things like smart contracts and distributed corporations. In other words, the changes brought about by the bitcoin protocol have only just begun. Check out more of my bitcoin market coverage.Read More
A big question as any new industry develops is how will things break down geographically. Will large international brands dominate the space, or will local knowledge be important enough to give regional players an advantage? And as I cover the bitcoin space, I think this is one of the greatest unanswered questions in the bitcoin startup ecosystem.Taking a quick step back, why might an industry tend towards larger or smaller players?Some examples of why industries with larger players developNetwork Effects: You use Microsoft Office because everyone else uses itBrand Recognition: Coca Cola is everywhere even though they tailor to local tastesTechnical Knowhow: British Petroleum (BP) really knows how to get at oilSome examples of why industries with smaller players developDiffering Regulations: Healthcare laws vary widely country to countrySpecialized Needs: Religious/ethnic minorities may require special food/servicesBrand Differentiation: Wine labels are for specific operations from specific regions The reason I’m thinking about this is that I recently came across a new bitcoin payments startup that is strongly focused on the Spanish market. Cripto-Pay, based out of Madrid, was founded in 2013 and employs 7 people. They offer an e-Commerce and Point-of-Sale (POS) solution that enables merchants to accept bitcoin as a form of payment. While they are still very early stage, they seem to know what they are doing.Representing the large player in this discussion could be BitPay. That company has been around longer, is better funded, and has locked up a variety of large customers, such as Tiger Direct, Gyft, and Shopify. Their international bona fides is found on their website, which claims that they can localize into over 40 languages.Assuming they want to grow their operations globally, will BitPay be able to muscle their way into the Spanish market? Will Cripto-Pay have enough of a head start to make an acquisition offer from BitPay the only viable way they could enter that market? Will Cripto-Pay be doing well enough as “the big fish in a small pond” to reject such as offer?One way to potentially answer these questions for an industry is to look at how companies in the most mature segment of that industry take shape. In the case of bitcoin, the earliest participants are mining companies, both those hardware companies building mining rigs and software companies offering mining pool services. The industry started out highly fragmented, but has seen recent mergers and acquisitions (M&A) in the hardware space and dominant mining pools in the software space.Another key question will be how the consumer interacts with the solution. Assuming we’re talking about bitcoin payments, if it’s fully integrated behind the scenes, having a branded solution won’t matter to the consumer. On the other hand, if I have to log into my pre-existing account to make a payment (like how PayPal made me log in even though I was on another website) then you may be able to create some customer pull and network effects.Then, there are the current and future regulations to consider. The rise of bitcoin has lead to a host of regulatory efforts at various national and municipal levels. It remains unclear, to say the least, how these efforts will play out. Further complicating this area is the current lack of international coordination, similar to what occurs in traditional finance with the Basel Accords. The crux of the issue here is whether or not regulations will be similar enough to allow large external players to easily reach local compliance. All in all, my belief is that bitcoin companies will start highly fragmented and then consolidate over time. The fragmentation phase will be driven by an inconsistent development of regional regulations and the importance of local relationships to get bitcoin penetration. The consolidation phase will be driven by a normalization of regulatory frameworks and customer-pull/network-effects from brands that have a lot of trust (trust in both the literal and figurative sense) and/or can capture economies of scale. This is generally good news for VC or Angel investors in the bitcoin space, since even if the horse you bet on doesn’t end up as a top player within a category, they could still grab enough customers or really understand a specific geography to generate significant M&A interest.Read More
Amazon launched their mobile card reader and companion app this week taking another step into the world of offline commerce. “Amazon Local Register,” similar to Square and PayPal, will enable users to accept credit card payments on a variety of mobile devices. (You can see a full list of point of sale 2.0 companies here.) Small and medium businesses (SMBs) can also purchase a range of compatible accessories including cash drawers, receipt printers, iPad stands, etc., to create a complete point of sale solution – merchants can buy a complete kit from Amazon for $380 that includes a Kindle Fire HDX 8.9.The dongle itself costs $10, but this is instantly refunded in the form of transaction credits. Amazon is also significantly undercutting the competition with its per-swipe transaction fees, launching with a promotional rate of only 1.75% (per swipe) for anyone that signs up before October 31st. This rate will be good until Jan 2016, when it will revert to the normal 2.5% (still undercutting the competition). There are some concerns regarding profitability with this model, especially since Square is still operating at a loss (source), but it’s a strategic move for the e-commerce company. In addition to lower fees, the company is also heavily touting its customer service and support, which could be a big differentiator over competitors. SMBs that already use Amazon online services may also find added value in syncing their online and offline data.“According to the US Census Bureau, there are 26 million small businesses in the US. Most of those companies do not have a mobile point-of-sale solution,” says Amazon spokesperson Julie Law (source).The macro numbers also indicate that there is a large opportunity to increase the company’s footprint. According to Forrester, online sales accounted for only 8% of all retail sales in 2013, which is expected to grow to 11% by 2018 (source). Despite the growth rate of e-commerce being significantly higher, offline commerce isn’t going anywhere anytime soon. The e-commerce giant understands the potential market and is not shy about pursuing strategic initiatives. For example, this year alone we saw the following:Amazon’s Fire phone that has a “FireFly” button to help find products on Amazon using image recognition.Amazon Wallet, a consumer facing mobile wallet service that allows users to scan and store their membership, loyalty, and gift cards within the app.Expanding their same day delivery service across six cities in order to entice customers that would normally shop at their local supercenters (e.g. Walmart, Target).In looking at the big picture, it makes sense that Amazon is releasing a mobile payments product. They have already launched numerous products this year for consumers and are now taking the opportunity to move towards the other side of the value chain – SMBs.Read More
“Venture Scanner’s insights help us make sense of emerging sectors and zero in on opportunities.” Duncan Davidson, Managing Director at Bullpen CapitalAt Venture Scanner, we pride ourselves on our analyst insights. While we think of ourselves as a technology company and are reinventing the analyst coverage industry from the ground up with data, technology, and workflows, we ultimately see our analyst insights as the determining factor when our customers make decisions. Whether it is a CIO or CMO making a key purchasing or partnership decision, or a VC making an investment decision, or a corporate development executive making an acquisition decision, in all these cases the determining factor has been the insights on top of the data and companies our technology has aggregated, clustered, and organized.Our technology enables our analysts to surface companies in sectors and assess how companies are performing based on available social, traction, and financing data, but to truly cut through the noise our analysts immerse themselves in the sectors we cover and gather firsthand intelligence. The amount of publicly available data on private companies is very limited, and the earlier stage the company, the more finite that data set is. Many times the data set available is limited to what the companies themselves have uploaded on properties like AngelList, traffic or app data from services like Compete, and social data from Twitter. There are also crowd signals from products like ProductHunt that we factor in. However, while the sum of all this publicly available data might give us an okay first approximation of what companies might be trending, it certainly does not provide the insight to make a purchasing, investing, or acquisition decision where significant sums of money are at stake.Such decisions require actionable insights. In order to provide insightful and actionable intelligence to our customers, we organize our operations around domain experts who play the role of sector analysts. Our sector analysts spend their days fully immersed in the sectors they cover through the following activities:Product Lens: Creating trial accounts in the companies within their sectors, using the products, and determining unique differentiators, strengths, and weakness for said products.Primary Research: Meeting one-on-one with companies within their sectors to understand strategic direction, key feature releases on the horizon, and operating metrics.Trend Identification: Attending sector focused events/meetups and meeting with VCs investing in their sectors to catch emerging trends.The sum of all this gives our sector analysts the raw ingredients to form actionable insights for our customers. These include defining the unique drivers of each category of companies and highlighting the companies that are exhibiting them, compiling feature and usability comparisons amongst the companies within a category, and stating the key assumptions within a category that will determine future growth.So, while unearthing the data on private companies through our technology provides the starting point for making sense of any given sector, category, or company, the final answer lies in insights. Give our analyst insights a try, contact me at [email protected] or 650-218-0067.NaderRead More
A recent Business2Community post named "7 Facts About Marketing Automation" predicts that the adoption of marketing automation technology is expected to increase by 22% by 2015. As businesses worldwide began adopting marketing automation to generate more leads and increase productivity, more companies offering such technology began appearing on the horizon. I interviewed one of the players in the marketing automation software category, GreenRope (greenrope.com), to learn more about its product and position in the marketing automation sector.
One of my favorite and first digital health companies I came to know is Proteus Digital Health. When I discovered what they were working on some time ago, I was quickly both seduced and awestruck. “No way…a smart pill?...this has to be made up” was probably my first thought – like the fake Pied Piper landing page for the HBO series Silicon Valley – but unbelievably, the company was real, with FDA plus European Commission approval and all. And my mind was blown.I’ve spent the bulk of my career in healthcare (including healthcare services and medical devices) and love it for many reasons. But discovering Proteus was an aHA! that really got me thinking deeper about the power and possibility of health + technology and helped inspire me to expand my focus to startups in the digital health space. To this day, when someone asks me “what is digital health?”, I generally describe it by way of an example and frequently mention Proteus as that example. It normally is received with both ooouus and ahhhhs. Anyway, given my *arms-length crush, I was happy when Proteus recently gained mass “darling status” after completing the last piece of a $172M fundraising round at the end of July. This makes them one of the most well-funded private digital health companies out there at the moment and adds them to the speculative short-list of “who will be next to IPO in digital health?” No doubt very exciting for them...but I'm sure they'd be the first to say their work has just begun as they help to move digital medicine to the mainstream. *Note: I have no affiliation with the companyOk, ok, so what makes Proteus Digital Health so cool? What do they actually do?To first categorize, they are a digital medical device and remote care management company - with overlap in the internet of things sector - and they produce a 'digital [medicine] feedback system'. This is comprised of a tiny organic ingestible sensor that people swallow with (or in) their medication. This sensor contains trace amounts of copper and magnesium that react and send a wireless signal to a disposable battery powered patch (which they also produce) which sticks to one's abdomen. This patch reports data wirelessly to the cloud and provides information on if/when medications have been taken and also aggregates rest and activity patterns. Pretty cool, eh? It's the stuff out of science fiction - understanding your body from the inside out! There is a video on their website which summarizes this process nicely as well if you are more of a visual person.Overall, Proteus empowers caregivers to ensure patients are both taking medication and taking it properly. Medication non-adherence can lead to readmissions and chronic illness which both are key drivers of increased healthcare costs. Proteus' simple value proposition is that their products reduce the incidence of non-adherence, which ultimately saves healthcare providers and insurers LOTS OF MONEY. Cha-ching! Oh, and let's not forget it helps patients live healthier, happier lives too.The whole concept is quite brilliant in my opinion - anything that can promote quality outcomes and help to reduce costs in the soaring cost environment that is healthcare is a relatively frictionless sell (Note: Proteus is currently in private beta with a handful of US health systems and working with some prominent pharmaceuticals as well). A large volume of other digital health startups are attacking the US high cost / low quality healthcare epidemic from different angles. A few examples being: improving communication and clinical workflow, adopting teleHealth technologies and leveraging electronic health records.Thanks Proteus for the personal inspiration - onward and [email protected] - For all the deep clinical information you can handle on their ingestible sensor, check out this paper.Read More
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