January 27, 2016

CES 2016: How to Get From Seed to Series A

Photo: Techstars
During my visit to CES 2016 in Las Vegas, Nev., I had the opportunity to attend a panel discussion hosted by Techstars titled "How to Get From Seed to Series A." Moderated by Techstars' Ari Newman, the panelists included Anjula Acharia-Bath of Trinity Ventures, Adam D'Augelli of True Ventures, Jenny Fielding of Techstars, and Nihal Mehta of ENIAC Ventures. While you can listen to a recording of the full panel via SoundCloud, there are a few items worth discussing in this post.

In his blog post summarizing the event, Mr. Newman notes: "One of the themes that came out of the panel was that Series A is still about the overall story. Metrics do play a part, but the investors have to share the vision and the long term potential about a huge return at this stage."

While I agree with the importance for early-stage companies telling their story to potential investors since metrics may not be plentiful given the short market traction of the company, the company's founders must still present key performance indicators (KPIs) for the short- and long-term future. In my experience, while investors understand that metrics may play a small role when evaluating the worthiness of making an investment in an early-stage startup, they also want to know the founders are thinking about the future through measured results.

Photo: Techstars
The panelists collectively agreed that seed-funded companies are seeing a more competitive environment in attracting investments from early-stage investors. This, in my opinion, may be the result of a volatile investment climate, a growing number of startups looking for funding, or a combination of the two. Regardless, founders must do their homework and understand the investment behavior and interests of prospective investors. "Do your VC research deeply and make sure they are a fit on paper so you don't waste time," Mr. Newman wrote.

Ms. Fielding provided a very important piece of advice for entrepreneurs: Develop your relationships with potential investors prior to requesting money. It may take a year or two of develop a business before the point outside funding is necessary. Entrepreneurs should take this time to develop relationships with advisors and potential investors.

The previous sentence leads to another point, which was addressed by Ms. Acharia-Bath: "Don't ever tell someone that you are raising money because the moment you tell them you are raising money, [the investor] thinks you are selling to them. And that always works against you." Rather, Ms. Acharia-Bath continued, "if you ask for money, you get advice. And if you ask for advice, you get money." I completely agree (with both points)!!

Lastly, a panelist noted, if a business does not have enough cash to sustain its operations for more than six months, then the owner(s) need to focus on raising funds from investors.

What advice would you give to an entrepreneur seeking funding for their enterprise?

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

January 17, 2016

How will the Global Economic Environment Impact Key Industries in 2016?

The Economist Intelligence Unit published a report, Industries in 2016, that explores how the global economic environment will impact key industries in the coming year. The report provides analysis and forecasts for six industries: automotive, consumer goods and retail, energy, financial services, healthcare, and telecommunications. This post focuses on aspects from the report's discussion of the telecommunications industry.

The report's opening paragraph says, "To prosper in 2016, companies must prepare for volatility in emerging markets, parsimony among consumers and governments, tightening regulations and yet more digital disruption." And regarding the telecommunications sector, this industry "is no stranger to disturbing change and 2016 will bring more of it."

The EIU report is correct to note that "with consumers increasingly accustomed to being connected at all times, operators will have to invest mightily to keep them happy." The report mentions major investments by two multinational telecom players seeking to increase connectivity among its customers while, at the same time, increasing its customer base: Vodafone's £7 billion modernization program called "Project Spring," which is "aimed at improving connections on its mobile networks." And Indian operator Bharti Airtel's 'Project Leap,' a US$9 billion investment over three years that "will upgrade legacy networks and thousands of base stations, build indoor networks and make its fixed broadband lines faster."

While internet access may be ubiquitous in the industrialized world, billions of people in emerging and developing countries still lack internet access. "Another aim of operators' investments will be reaching the swathes of the global population for whom internet access is fleeting and unaffordable," the report explains.

Furthermore, "The targets for 2020 set out by the International Telecommunications Union (ITU) include connecting more households and making telecoms services more affordable for consumers. Hence operator efforts to boost both the take-up and affordability of internet access, whether via smartphones or traditional broadband connections." And mobile broadband, through the increasingly rapid deployment of 3G and 4G connections, is widening access to mobile broadband in developing markets. In fact, 2016 internet penetration globally "is forecast to surpass 50 users per 100 people for the first time."

The internet of things (IoT), which are networks of objects linked through embedded connectivity, continues to be promoted as the next big thing. "Still," according to the report, "in 2016 companies across more industries will become more aware of its many potential applications, as the increased sophistication of 4G technology spurs the market for connected devices." Device makers, and smartphone manufacturers in particular, are facing margin pressures and decreased sales as a result of market saturation and intense competition. Those companies will need to effectively capture revenue the IoT market is expected to generate in 2016.

With respect to the continued rise of global e-commerce, the EIU report notes:
Singles Day, on November 11th, is the largest online shopping date in the world, with US$14.3bn sales in 2015 thanks chiefly to its popularity in China. Yet Singles Day could easily follow Black Friday, originally a US-only event, to go global. The force behind it, Alibaba, is expanding aggressively overseas, where ethnic Chinese are already catching on. An even earlier start to the holiday sales season beckons.
Lastly, "The popularity of mobile video owes much to technological advances like bigger and better smartphone screens, and faster internet connections." Not just established companies like Facebook and YouTube, but Periscope and Vine are offering live video feeds. "Together with advertisers, these companies will seek to profit from the coming march of cheap 4G connections across India and other emerging markets."

The EIU says its report will help business leaders "pinpoint key issues and trends that will enable you to influence strategic decision-making and answer vital business questions for your organisation in 2016." What key issues and trends are valuable to your business? Are there issues affecting your business not covered in the report?

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

January 13, 2016

Observations from the Eureka Park Marketplace at CES 2016

I attended CES® from Jan. 5-9, 2016 in Las Vegas, Nev. During my visit to the internationally renowned electronics and technology trade show, I had the opportunity to visit with several startup companies exhibiting in the Eureka Park Marketplace at CES®. Eureka Park is promoted as "the flagship startup destination at CES, providing a unique opportunity to launch a new product, service or idea."

500 companies exhibited at this year's Eureka Park Marketplace, up from 375 in 2015. According to an announcement by the Consumer Technology Association (CTA)™, which owns and produces CES®, over 1,100 startup companies "have exhibited in Eureka Park since its inception in 2012" and "at least 100 of these startups have been funded at $1 million or more. Eureka Park created a leaderboard that provides a ranked list of those companies who received funding.

This year's Eureka Park had a strong representation from outside the United States. Among the 500 startup companies from 29 countries, "more than 50 percent of exhibitors coming from outside the U.S. New countries represented in Eureka Park in 2016 include Austria, Czech Republic, Greece, Netherlands, New Zealand, Russia, Taiwan, Turkey, and UAE. At the show, Eureka Park is segmented by specific verticals such as wearables, smart home, health and sports tech, 3D printing, audio and video and virtual reality."

Among the hundreds of exhibiting companies, I found particular interest in a company called ECHY, which has developed an environmentally-friendly alternative to electric lighting during the daytime by capturing natural light on the outside of buildings and brought inside by fiber optic cables. According to the company's website, "The idea of using fiber optics to transport sunlight to the inside of buildings began in the 1980s. It was, however, at the time, too expensive to be produced on a large scale." The company's founder's solution, in 2010, has enabled the democratization of natural lighting by fiber optics. They launched their idea while studying at the National Polytechnic School in Paris and patented their technology in 2012.

The Champs-sur-Marne, France-based company further explains that "During the first year, the ECHY team were working on Research and Development at their school in Paris, where they created their first prototype and product: Eschysse. ESCHYSSE has been available on the market since 2013, and marks the commercial beginning of ECHY." The company's team currently consists of six individuals together engineers, researchers and sales representatives.

The  company provides the following reasons on why to use its technology:
  1. Benefit from the positive impacts natural light has on our health and well-being;
  2. Make the most of underexposed areas;
  3. Make your building more energy efficient;
  4. 100% sustainable and green technology;
  5. A modular system that can be adapted to any room; and
  6. Constant lighting even it isn't sunny.
ECHY produced a brief video that explains how its panels are fixed on a tracking system, which enables them to absorb sunlight during the day and then transport it, via fiber optics, to the inside of buildings.

I also enjoyed visiting with Well Being Digital (WBD101), which created "the smallest heart measurement earbud design." According to its website, the Hong Kong-based company "aims to enable affordable & accurate underlying technologies for mHealth/wearable devices." Among the three platforms or devices, ActivHearts™, MoGo™, and EarTaps™, the Hong Kong-based company demonstrated, I found interest in ActivHearts™, which is a heart rate measurement technology using photoplethysmography (PPG) that can be applied to earphones and wrist watches.

WBD101's website further explains that "one of the challenges of PPG technology is that the PPG sensors pick up a lot of noise when the user is exercising, as it is very sensitive to motion. WBD101 technology uses multiple source and sensor pairs and advance digital signal processing to remove these motion noise." Moreover, "The latest generation of ActivHearts™ makes use of Bluetooth Smart technology (BLE) that means you can easily have your heart rate information displayed on your smartphone apps."

WBD101 produced a video for CES 2016 highlighting its ActivHearts™ technology.

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

January 9, 2016

Mexico's Growing Mobile Economy

From January 2-5, 2016, I attended the AT&T Developer Summit in Las Vegas, Nev. Among the several track sessions offered throughout the conference, I found particular interest in a session titled "Understanding the Market Opportunities in Mexico" featuring Christina Ruiz de Velasco, Executive Director of International External Affairs for AT&T Mexico. Ms. Ruiz de Velasco's presentation, "Mexico: Regulatory Reforms Driving Competition and Connectivity," focused on AT&T's market entry in Mexico, Mexico's telecommunications market structure, telecom and media reform in Mexico, and market trends in Latin America's second largest economy.

During her presentation, Ms. Ruiz de Velasco noted that revenue from Mexico's mobile segment represents 57 percent of the telecom sector and is growing at faster rates than the industry as a whole. The mobile industry is expected to generate revenues of 262 billion pesos in 2016, up from 246 billion pesos in 2013.

The rise of mobile revenue is a result of an increase in mobile subscriptions. According to Ms. Ruiz de Velasco, mobile broadband subscriptions (16.6 million) overcame those of fixed broadband (16.0 million) in 2013. Mobile broadband subscribers will reach 32.6 million in 2015.

In addition, Mexico had just 2.7 million mobile broadband subscriptions in 2010. Smartphone penetration over total mobile lines has doubled in the last three years and the growth has been driven by the increasing variety of devices offered in the market and price decreases due to brand competition and technological development.

With respect to tablets, Ms. Ruiz de Velasco said that "although the tablet market in Mexico remains small, forecasts show higher consumption of mobile services." The growing adoption of tablets will also accelerate the use of mobile broadband. Mexico's tablet penetration rate for the third quarter in 2015 is estimated to reach 14 percent, which is well-above penetration rates in Brazil and Argentina at 11 and 10 percent, respectively.

Regarding app adoption by Mexican consumers, Ms. Ruiz de Velasco explained the Mexican population shows digital skills for the use of all mobile services and application adoption is highly correlated with expansion of mobile device penetration (i.e., smartphones and tablets). The growth rate for mobile app adoption in Mexico is estimated to be 52 percent while the growth rate is estimated at 65 percent in 2015.

During the Q&A session following the presentation, I asked about the use of mobile applications by Mexican enterprises. While very few enterprises in Mexico are using mobile apps, Ms. Ruiz de Velasco predicted this trend will reverse course as the mobile economy continues to grow and Mexican enterprises seek to gain a competitive advantage at home and abroad.

I agree with Ms. Ruiz de Velasco compelling argument that app developers should consider developing mobile applications specifically designed for the Mexican market. While other emerging markets such as China and India are significantly larger markets with respect to population and number of smartphone and tablet users, Mexico's gross domestic product is higher on a per capital basis. In addition, Mexico has a young population that is seeking to learn valuable skills necessary to succeed in a vastly global economy.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

January 2, 2016

Learning about India by Starting with the State-Level

As China's economy continues to decelerate, multinational companies may soon be looking at business opportunities in India--the world's fastest growing economy as measured by gross domestic product (GDP), according to the Center for International Development at Harvard University. "India tops the global list for predicted annual growth rate for the coming decade, at 7.0 percent. This far outpaces projections for its northern neighbor and economic rival, China, which the researchers expect to face a continued slowdown to 4.3 percent growth annually to 2024."

In my limited experience of working in India, I learned that the country with a population of 1.3 billion within a federal union of twenty-nine states and seven union territories contains a myriad of complexities best understood at the state-level.

Amit Kapoor, Ph.D, president and CEO of the India Council on Competitiveness and honorary chairman of the Institute for Competitiveness, was interviewed by the Seattle, Wash.-based National Bureau of Asian Research about understanding the competitiveness of India's states including key trends, investment patterns, signs of progress, and suggestions for improvements in state-level competitiveness.

As companies look for opportunities in what is expected to become the world's most populous country by 2022, according to the United Nations, I found particular value in Dr. Kapoor's comment:
For decision-makers in particular, focusing on how to improve the competitiveness of individual states can ultimately make [India] more prosperous. This bottom-up approach provides a more detailed look at the distinctions between high- and low-growth states; identifies areas that have greater firm concentration, network effects, openness, and integration into the world economy; and reveals the characteristics or policy measures that led to each growth pattern. Therefore, it is extremely important to dig deeper than country-level analysis and actually focus on what is happening at the regional and state levels in bigger economies.
In addition, Dr. Kapoor notes that infrastructure and urbanization is a challenge India will need to address:
India's urban density is one of the highest in the world and will continue to increase as more people flock to the cities. China just witnessed a major migration during its period of economic dynamism, and India will see a similar scale of migration over the next fifteen to twenty years. How the government manages this massive shift of people will greatly affect the country's competitiveness and economic reform efforts.
Dr. Kapoor's interview provides good insights on how to accurately learn about India by starting with the state-level of what is now the world's fastest growing economy. Do you agree? What would you add?

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.