My five favorite startup pitches from TechStars Demo Day |
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What do you get when you toss 28 young, creative and enthusiastic Internet entrepreneurs into a room for three months? The answer: TechStars.
The startup incubator accepted its first class of entrepreneurs this past summer in Seattle, but until today the 10 entrepreneurial teams had pretty much kept their ideas under wraps. That changed this morning as angel investors, venture capitalists and the media packed into The Triple Door in downtown Seattle to listen to eight minute pitches from an array of energized and wide-eyed entrepreneurs.
Below, you'll find my top five picks. Feel free to agree, disagree and debate. Of course, my opinion doesn't matter since I am not writing any checks.
And, as TechStars Seattle director Andy Sack will tell you, the big winner today was the startup community.
"This has been a community effort and TechStars is about growing the startup community in Seattle. It has been my pleasure," said Sack, holding back tears during his opening remarks. "People ask me how TechStars is going, and it totally has exceeded my expectations."
But there was another point to Demo Day: Money. And Sack wasn't shy about encouraging investors in the room to get their checkbooks ready.
The ideas at this morning's Demo Day didn't disappoint, so I am sure there will be some money flowing. All of the pitches were extremely polished, not a surprise given TechStars' emphasis on practicing investment presentations. But a few pitches and ideas stood out to me. Here they are in order of investment opportunity:
Deal Co-Op: Perhaps the crowd favorite, the entrepreneurial brothers of Nate and Mike Schmidt certainly grabbed some attention for their daily deal concept when they used the "P" word. Profitability. The duo -- who left family in Birmingham, Alabama to enroll in TechStars Seattle -- have already turned a profit.
With 10 customers signed on, Deal Co-Op is doing more than $10,000 a month in revenue. And it's shooting for 100 affiliate customers in the next five months, which would equate to $1 million in revenue. "Daily deal marketing makes money," said Schmidt matter-of-factly.
The idea behind the startup is to create niche-oriented daily deal stores for targeted communities like restaurant chains, newspapers and community groups like the Green Lake Moms.
"Deal Co-Op is the company to build them an online store that they can have up in running in 24 hours," said Schmidt. "Our affiliates know that Deal Co-Op has their back. We have customer service taken care of. We send out great looking emails on time to alert people about deals. We collect and distribute the money and give everyone access to a full accounting system."
This all may sound familiar, especially to readers of TechFlash. After all, Tippr -- the heavily-funded Seattle startup led by serial entrepreneur Martin Tobias -- is moving in this direction in an effort to differentiate itself from the Groupons and Living Socials of the world. Just today, Tippr announced that it was powering the new daily deal sites for TV giant Belo, including King 5 in Seattle.
My question remains: How long will it take until we get to daily deal overload?
GoMiles: Talk about solving a real consumer pain point. GoMiles, a former TechFlash "Startup of the Week," is attempting to make it "dead simple" for anyone to manage airline frequent flyer miles. That may seem like a niche market. But co-founder Mike Komanitsky says "there are literally trillions of points out there worth billions of dollars." Eventually, GoMiles wants to plug-in to other online travel Web sites as an add-on service, bringing those partners additional revenue and "stickier customers."
Komanitsky certainly has a solid pitch, and a strong command of the subject matter given that he and founder Marc Kamaka were working on the idea prior to TechStars. Nonetheless, this idea had people talking afterwards, and it would certainly qualify as one of my top choices of the day.
Kinizi.com: Daily deal sites are all of the rage today, from Groupon to Tippr to Living Social. But no one is really bringing the concept to the rough-and-tumble residential apartment market. That's the idea behind Kinizi, which describes itself as "the best place for renters to save on apartments." The idea of a niche-oriented daily deal site tied to a specific category -- in this case apartments -- is a good one. And I think there's real money to be made as owners of apartment complexes do everything they can to attract tenants and fill buildings.
But there's one big concern: What happens if the real estate market turns, and vacancy rates start to drop? Co-founder Philip Lee doesn't see that happening, arguing that apartment vacancy rates have continued to increase over the past 30 years. Kinizi launched its first deal today for the 37-floor Aspira complex in downtown Seattle, an apartment building which has 80 vacant units. Those who participate in the daily deal can save up to $6,000 on a 1-bedroom apartment. Kinizi is smartly going after markets where apartment vacancies are high, cities like Phoenix, Fresno, Jacksonville and Seattle.
"We want to become known as the destination for discounted apartments," Lee said.
Like all daily deal sites, Kinizi must watch out for faster-moving and more heavily-funded competitors since the daily deal model is proving rather easy to replicate. But if Kinizi can execute, beat others to market and hope that the apartment rental market remains bad for landlords, then they might have a shot with this idea.
Giant Thinkwell: This was perhaps the best startup pitch I've ever seen. I mean that. In more than a decade of covering startups, I've never seen anything quite like this. Funny. Creative. Odd. The founders -- Kevin Lenaway and Kyle Kesterson -- were introduced by an animated super hero who joked about their loser personalities. (Wish I had taken video of this one, so if anyone captured it let me know).
So, what's Giant Thinkwell actually doing? They are trying to create celebrity-based social games, bringing the virtual pet concept to a new Web-based game. The idea is that game players nurture animated baby celebrities like MC Hammer, John Stamos and Punky Brewster, purchasing virtual goods along the way. Sound weird? Yep, it is. But some of the strangest ideas are often the best.
The big hurdle here is the lack of a true celebrity endorsement. While Lenaway says they are in talks with a number of TV stars from the 80s and 90s -- and he's hopeful to have five or six on board by the end of the year -- he's yet to nail one down. The business is kind of dependent on that. I've also never been a big believer in the virtual currency concept, but given the creativity and the graphics involved in this project one can see this going viral. Seems like a strong business executive is needed to round out the team, harnessing the creative energy surging through the bones of Lenaway and Kesterson.
Cabin Fever Toys: Former Cranium executive Adam Tratt is a man on a mission, looking to wipe out child obesity in the U.S. by changing the way kids play. "We believe rather than compounding the problem of childhood inactivity, technology should make it more fun to go outside and play," said Tratt, who introduced an idea called Zoomigos. It's a concept that combines elements of Nike Plus with the Nintendo Wii with Webkinz.
Essentially Zoomigos are "motion-sensing stuffed animals" which incorporates the activity of a child and combines it with a Web-based analysis. Cabin Fever Toys is still in the early prototype stage, but the idea addresses a real health crisis in the U.S. in a fun way. It hopes to generate revenue through a subscriber-based reward system and accessories. Of course, Kinect is the new 800-pound gorilla in this market. But Tratt said the problem with Kinect is that it is tethered to a screen, and the idea behind Cabin Fever is to get kids outside or away from a computer when playing games.
This all seems like a fabulous concept. But the startup costs -- given the hardware expenditures -- seem higher than some of the other presenting companies. (Reminds me of the challenges encountered recently by heavily-funded Smith & Tinker, which just scrapped its hardware component). But Tratt is thinking creatively about marketing the concept, moving beyond traditional retail outlets to insurance companies, pediatrician offices and other health-based opportunities. The company also is exploring federal grants and non-profits to help bankroll the concept.
Other presenters today -- all of whom did a fantastic job -- included Thinkfuse, RewardsForce, WorldBlender, Highlighter and The Shared Web. As part of the TechStars program, founding team members receive up to $18,000 in exchange for a six percent equity stake.
Nearly every major venture capital firm in Seattle is supporting TechStars.
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