Perfect pitch

Impressive raft of young Israeli start-ups explain their products to potential investors.

startup cartoon521 (photo credit: Avi Katz)
startup cartoon521
(photo credit: Avi Katz)
The speaker at the podium seems momentarily flustered.
Given that he has only 30 seconds to speak, every momentary stumble can potentially be very costly. Luckily, he manages an elegant recovery to finish on a strong note, completing an impressive elevator pitch – the high-tech industry’s term for a brief summary of a new product that can be delivered to a time-pressured potential investor in the space of an elevator ride.
“Having only 30 seconds is pressured,” admits Avi Rosenzweig, head of business development at NovoSpeech Ltd., a four-year-old company producing an automatic speech recognition platform for mobile applications.
“It requires a great deal of focus. On the other hand, it is a great way to open doors.”
Participants in the 2012 Israel Innovations Marathon have come to the Shimon Peres Peace House in Jaffa, in late March, to hear dozens of elevator pitches and much more.
The event, organized by BootCamp Ventures, an international strategic corporate advisory firm for emerging technology companies, brings together representatives of 34 Israeli high-tech start-ups with investors from 14 different countries, including the US, Canada, Britain, Turkey, France and Austria.
The atmosphere, whether in the formal sessions, during coffee breaks or at the beer soaked happy hours, can be electrifying. The boot camp moniker is apt. The emphasis at all times is on speed, clarity and getting to the point. The key to getting noticed by an investor is to pique their interest fast by telling an easily graspable story about how your product can sweep a market. A muddled pitch indicating an element of confusion can be the kiss of death.
The range of products pitched by the startups offers a glimpse of what may be up-and coming in technology offerings in the near future, with a clear focus currently on mobile applications, social networks and multiplayer games. The showcased products included gadgets that eliminate mobile telephone roaming charges, health monitoring applications that work on mobile telephones, air pollution monitors for household use, graphic design tools, digital wallets, and applications harnessing social networks to enrich shopping experiences.
According to BootCamp Ventures, the 34 start-ups at this year’s Innovation Marathon were carefully chosen out of hundreds of applicants.
Presenters are typically early stage companies, with at least a working product that can be showcased to investors and sometimes data gleaned from initial user trial runs.
These companies are typically seeking investments between half a million to two million dollars for product development, business development or marketing, to enable them to get to the point where they can make a serious effort to begin penetrating markets.
Other events will showcase seed start-ups that have no more than an idea or at most a product mock-up. They typically require no more than several tens of thousands of dollars of investment to enable their founders to continue to survive as they work in their garages – or, more typically these days, in cafés with wireless Internet access. Early stage companies are usually at least a couple of years more mature.
Energy and eagerness
BootCamp Ventures run similar events in Berlin, Istanbul, Russia and Silicon Valley.
Israel, given its density and intensity of start activity, is a natural focal point for an innovations summit.
Last year BootCamp Ventures conducted a New York and Boston road trip to expose leading Israeli start-ups to American investors.
“The quality of presentations and speakers here is outstanding, comparable to Silicon Valley start-up companies,” says Nazmin Alani, Managing Director at BDC Venture Capital of Ottawa, Canada, a panelist at the Israel Innovations Marathon. Alani had read the book “Start-Up Nation” prior to his trip to the event, his first visit to Israel, but said he was still overwhelmed.
“The energy, the eagerness of the entrepreneurs is very impressive, even if you arrive with some notion of what to expect,” he tells The Jerusalem Report.
In a typical formal session, between five to ten start-up presenters are given the stage.
Each presenter has 30 seconds to make a first impression on a panel of judges, composed of venture capital investors. After the round of elevator pitches, the presenters are again called up to the stage, each in turn, this time granted a luxurious eight full minutes to provide greater detail on their companies and products with a slide-show presentation.
Each slide show presentation is followed by a question-and-answer period in which the panelists grill presenters with questions.
The panelists are not shy about asking pointed questions if they feel it is warranted: Where exactly is the value added in your product? Isn’t Google already offering something similar for free? Have you considered perhaps making your product more focused on a particular industry? How will you make money from this?
Efrat Barit, co-founder and CEO of Ringbow, includes a brief video in her slide-show presentation showing off the multiple uses of the gadget she is pitching, a wireless computer mouse worn like a ring on the finger, enabling improved interaction with touch screens. One advantage of having a tangible, solid gadget as a product is that it can be passed around to the panelists to touch and admire up close. Ringbow was founded two years ago. The “aha” moment that led to its creation came to co-founder Saar Shai when he was on a bus.
“He had an iPod classic, one with a wheel controller,” explains Barit. “He suddenly felt that he wanted the same amount of control he got with the iPod wheel on every touch-screen device. We decided to use a ring because it can be worn on a finger and used as a wheel. Then we realized that we can add much more functionality to the touch screen experience, not just scrolling.”
Usage of touch screens, installed in a vast swathe of electronic devices from mobile phones and tablet computers to car radios, has exploded in recent years. Some computer industry analysts predict that touch screens will eventually be the default physical interface for nearly all computers, replacing the mouse and touch-pad. Ringbow’s founders point out that today’s touch screens register only one type of input – a single finger touch. The Ringbow ring facilitates menu-less touch screen navigation, along with fluent multi-finger interaction.
One interesting use of Ringbow is user identification in multiplayer games making use of the same device. Imagine, for example, a pair of players moving opposing forces in a war game played on a touch-screen tablet computer. Using Ringbow, players can simultaneously interact with the screen, with each player’s ring serving to identify which player is moving what screen element.
Ringbow has already won several awards for its innovation. It was included in Microsoft Israel’s list of top 20 start-ups in 2010, and won first place for “future potential” at a Mobile Monday start-up competition that year.
Nevertheless, the panelists pepper Barit with tough questions. How functional is the ring, which is expected to cost customers $45 to $49 a piece? Can it be integrated into existing devices? How small can it be made? Gadgets, they point out, can be more difficult to market than pure software products, because of the complexities of the manufacturing process. They require careful attention to issues of design, user functionality, battery life, size and weight, and market segmentation.
NovoSpeech recognition
Rosenzweig, presenting for NovoSpeech, which is a software platform, not a gadget, has a different challenge in impressing the panelists. Speech recognition is a subject that has been intensely researched for decades.
The smartphone speech recognition niche already has a dominant giant, Nuance Communications, which acquired one of its largest competitors, Vlingo, in December to obtain an even larger market presence. Nuance technology is featured in the Siri speech recognition interface installed on every Apple iPhone 4S device. Against such a large rival, what can a young start-up do? Rosenzweig decided to wow the audience with the advanced state of NovoSpeech’s current technology along with tantalizing expectations of future progress.
He points out that Apple has been sued for false advertising by a frustrated Siri user. Background noise, accents and low computational power can easily bewilder Siri. Using Siri in a tunnel or underground rail station is impossible, because the program is not functional without network connectivity.
NovoSpeech promises to overcome all these limitations and more. Its patent-pending algorithms are designed to provide recognition accuracy exceeding 95 percent even in noisy environments; accurate identification of words spoken by any person regardless of sex, accent, or speaking style; and the ability to recognize specific commands and names. It also inter-operates with Bluetooth technology and can perform in low computation power environments.
The company has some impressive products in the pipeline. The Quasar1000 is expected to provide speech recognition for applications that are not tied to predefined vocabularies. The Stellar1000, which Rosenzweig calls the “holy grail” of speech recognition, will provide continuous-speech recognition approaching human abilities.
The panelists do not give NovoSpeech an easy time either. Rosenzweig is repeatedly called on to answer questions on how much cash the company will need in its next stages, how realistic its road-map expectations are, and how it can fend off the competition it will surely face from what the panelists call “the large sharks in the water.” The session ends without a clear indication of whether or not the company is close to obtaining the half million dollars in investment that it seeks for sales, marketing and product development.
The human element
What emerges from the marathon sessions at the event is that for all the wonders of modern technology, the human element is still the most significant determinant of the ultimate success of a marketed product. It is humans who are the eventual end-user customers.
More than anything else, the investors look for a human story that speaks to them, which is one reason that short and snappy pitches are so prized – they force presenters to focus more on the story of their products than the technology.
“I don’t look so much at the technology. I am more interested in trying to understand what is the proposition,” explains Alani. “What is the customer pain point that you are solving? I think that if you can articulate that with clarity, that starts to resonate. Then I go deeper.”
Alani has worked with incumbent and new service providers involved in wireline, cellular, personal communications systems, and satellite communications. His work experience includes assignments in Canada, the US, Mexico, Argentina, Asia and Australia and he brings over 20 years of experience when sitting as a panelist at start-up events.
“I like to start simple, high level. Once we get past that, then we can talk about the details,” he continues. “If there is a problem out there, what is the problem you are solving? It is not that there are people out there waiting for this technology. People have problems that need to be solved. If you have figured out a way to solve a problem, explain that. Too many companies start with the technology, which can get very confusing.”
Alani has several pieces of advice for presenters faced with answering panelist questions.
“The point of the question is getting more clarity around the business model,” he says. “You articulated your proposition, now tell me what is your strategy in getting to market. What are your cash needs, what are your margins like? Is your price-point realistic? Are the margins you are expecting realistic?
“A lot of the questions are not necessarily about always getting the right answer,” he concludes. “What I am looking for is: has the entrepreneur thought through the steps? Look, no entrepreneur has all the answers. It is to get a gauge on the thought process. As a venture capitalist, I am not just dumb money. I can figure out gaps and this is something I can help you with. That is the ultimate matching process.”