Reviewing potential startups is a little bit tricky.
However, there are few things we look for when evaluating a startup:
- Solving a Real Problem. There are many businesses solving non problems or providing solutions. If no one really cares about the problem you are solving, then your business doesn’t have a future. Period.
- Team and Execution. Customers look for teams that are strong both technically and commercially with evidence they can execute. The quality of the services is primary for any kind of businesses.
- Scalable Customer Acquisition & Service Delivery. Have they worked out how to cost effectively acquire new customers. Can they scale service delivery with minimal effort, if they are doubling users every month, do they have to recruit 100 new staff each month or press a button and launch 30 virtual cloud servers? Most businesses are not built to scale, either the product, people or the process will break. Generally they either can’t acquire sufficient customers or the product/service can’t be replicated at high volume without increasing costs or headcount even faster. This is typically why we see software/ web application businesses being valued at such high multiples or even pre-revenue.
A great example is the new business software app called Slack.com from the US. In less than a year they have grown from launch to 120,000 paying business customers, TinyBeans has grown zero to 500,000 users in under two years, Canva has gained 1 million users in a year. Some of these businesses have already raised capital and have serious revenue or users and valued at $100 million plus, others are still at a very early stage but appear to have their business model working and may be looking for capital.
While it might be a little bit too late to invest in the former, once professional investors are involved its almost impossible to get into a fund raising but some of the later group may be looking to raise money in the new year.
Here are 19 businesses that were predicted to be great in 2015.
Pocketbook is an online personal finance service which aggregates all of your personal finance statements, income, spending and budgeting. No one has done a good job of this in Australia.The company has grown quickly and successfully raised a small funding round. The company is frequently near the top of the Itunes Finance App list. Many experts expect they will either raise additional capital to continue growth or someone with deep pockets will make them an offer they can’t refuse.
Stockspot is an online automated fund management service with lower management fees and less human error. The managed fund industry is ripe for disruption. Humans suffer from a lot of biases, Fund Managers try to outperform the index by trying to pick winners but 70% of them under perform the general market after their fees are deducted. Stockspot is a similar business model to Wealthfront in the US which has been wildly successful growing faster than any fund manager in US history.
This is not an easy business to setup, barriers to entry are relatively high to new competitors, existing fund managers are conflicted and probably can’ adjust their business models or costs to compete. Their website offers a very compelling story, their business model is clear cut and will scale very well if they can keep customer acquisition costs under control.
This is also a very sticky business, customers rarely switch fund managers. I believe there is an general mistrust of the funds management industry so a manager who is aiming to reduce management costs and provide transparency around the investment process with a slick customer acquisition routine is probably going to be successful.
Simply put, Vinomofo is a wine e-commerce. These guys are simply the best online email and video marketing company.
Wine is not a particularly easy e-commerce business, the freight costs are high and its tough to deliver a single case of wine to the consumer at a cost that matches the big liquor chains sale price at the store and the whole industry has an endemic discounting culture.
The one thing that singles these guys out is their relentless marketing execution and customer acquisition and in most businesses that is the biggest battle.
4. Shoes of Prey
Shoes of Prey is an online custom shoe maker who lets you design your own shoes and then makes them and ships them to you.
The concept is great and they have traction, most e-commerce companies resell other brand merchandise which is a high volume low margin game and most of them struggle to get scale. Marketing, shipping and inventory costs make it a tough business for all but the enormous and the very niche.
Shoes of Prey own and make the product so they capture a much larger share of the margin in the supply chain and they have an incentive to invest in their own brand. This model also benefits from not having to stock which is attractive. They actually generate net cash as they grow as they probably don’t have to pay the suppliers for a few weeks after receiving the cash from the buyer. There isn’t many businesses that can pull it off.
They have also just struck a deal to expand in the US by opening counters in Nordstrom department stores which is a massive win.
Airtasker.com is a web service that allows consumers/businesses to post tasks or jobs they want performed and service providers or individuals to bid for the jobs.
Originally it was pitched at individuals doing tasks for other individuals but has turned into a significant lead generation service for businesses.
They fill a gap in the employment market and are producing good gross margins (~15%) with strong growth on approximately $1 million in revenue a month. They have traction in a double sided market, these are hard to attack, in order to be successful you need to have both critical mass of both consumers and service providers, if you are missing either you don’t have a service.
Generally double sided markets end up with a few large competitors and are tough to crack once established, it appears Airtasker is going to be one of the winners for casual labour.
Canva is an online graphic design tool that does just about everything your average user needs to create great quality banner ads, newsletter designs and other business graphics with prebuilt templates and thousands of images and effects available with templates setup for creating and operating Social Media accounts.
Professional quality graphics design is typically the domain of hipster designers who speak a different language, wear different clothes and generally don’t work for you. They use tools like Adobe Photoshop and Illustrator that cost $1000s and have all sorts of tricks to create beautiful work.
The company hit a million users within 12 months of launching. The app is slick and works extremely well and replaces a very expensive suite of products for the majority of business users. The CEO is the networking master of the universe and has convinced a very high profile set of investors to both invest and publicly promote the platform including Guy Kawasaki who is an icon in the tech and startup industry.
TinyBeans is a social network for new parents This site is experiencing hyper growth, in October 2013 they had 40,000 users, in October 2014 they have over 500,000 users. The company just raised $2 million in September, showing that they have great monetisation opportunities.
8. Catapult Sports
Catapult Sports is a wearable sensor package for professional sports people that tracks their training and game performance and provides performance data back to their coaches and trainers in real time. Think of it like a Fitbit on steroids
The company is on fire, they recently raised capital from Mark Cuban the US Billionaire owner of the Mavericks Basketball team. They dominate a new market which is growing very quickly, they have hundreds of professional, national and Olympic teams using their product with strong positions in US NFL, Rugby League, Rugby Union, Soccer (football), every Australian Football team, Basketball and various athletic disciplines.
Expect a year of strong growth, expect to see the data gathered from the athletes shared on the TV/Web and possibly an acquisition offer from a large player such as Google, Apple or Nike (yes, completely different industries) or Fitbit.
Wattcost is a smart power meter that can adapt to existing meters both digital and analogue and provide power monitoring and help reduce power consumption.
This industry is ripe for efficiency gains, we have no idea how much power we use until we get the bill. We would however like to reduce our costs and consumption, but its not possible to get this information in real time. Existing smart meter solutions require an electrician to attend the site and remove and replace your meter with a smart meter. The costs can be significant. Some newer homes have smart meters but are primarily for the benefit of the energy company, there is no software or systems to help the user save energy.
Wattcost is user installable and works with both digital and analogue meters and is shipping now. Expect either a huge capital injection or a big acquisition offer in 2015.
Smart fashionable glasses with bluetooth embedded in the frame so you cant lose them. Massive press coverage in the last few months and rumoured to have a deal with a large Multinational electronics company to sell these in their stores.
Vistr is a Cash Flow Management for Businesses – Integrates with Xero.
Cashflow management has been a problem for businesses forever, very few workable software solutions exist, most small business accounting software does not solve this problem well.. Vistr founders have executed the plan well. Now the company has a working business model and paying customers.
Cartesian has launched the Argentum printer earlier this year which prints PCBs (the green boards in electronics). Given electronics hardware has seen a massive resurgence in funding in the last year, their product will be very popular.
This company offers a new hydroponics solution for making greenwalls in commercial buildings, such as walls of flowers and plants. The comapny has a great product and is winning commercial business.
It is a remote sensing and communications for farms and the environment. Agtech is one of the key opportunities for startups in the next decade. Demand for food and efficient production methods will continue to grow. Sensing and communications on the farm is a big problem and these guys have a good solution. Once they are established this will be a solid recurring revenue business.
15. Ninja Blocks
Ninja Blocks offers smart home automation hardware devices and Apps to allow home owners to monitor and control security, air-conditioning/heating, lighting and other power related utilities. Home automation and monitoring is another of the top 5 market opportunities for the next decade, due to low costs micro-controllers and components companies such as NinjaBlocks are able to drive prices down to mainstream pricing.
16. Asset Guru
Provides Asset Tracking for Enterprise & Businesses. This is a big problem, most companies just use a spreadsheet which doesn’t work very well. Recently launched so no customer data yet but they look like they have a credible solution to a real problem with slick customer acquisition. Could develop into a solid recurring revenue business.
App for stop motion & time lapse video and photography – Grown from 80,000 to 140,000 users in the last 6 months.
Social network for sharing your cosmetics and beauty tips. I know this is not exactly solving a big problem but you cant ignore the fact that they have 80,000 users up from around 10,000 a year ago months ago.
Robotic Farm machinery, using GPS and sensing can handle routine farm jobs such as spraying using a robotic lightweight tractor. Based in Queensland and with help from Queensland University of Technology and The University of Sydney Field Robotics team this is a low impact, low cost solution for a farm to cut their labour and fuel costs.
Once they had the robotic control system working in the proof of concept vehicle they have now built a very lightweight sprayer system which is perfect for spraying, cheap to run and low impact on the soil.