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Better accuracy than GPS and lower power consumption
GPS, Maps and location based services are great but with one big drawn back, they absolutely drain batteries. With phones like the Iphone 5 I find on an hour or so trip routing instructions can drain your battery.
This will become a much bigger issue in the near future, Cisco predicts there will be 50 billion connected devices by 2020 and a significant number of these will be low power, constrained devices often without keyboards, screens or other input means, many of which will need to determine and communicate location such as wearable sensors and other devices that are intended to last years with a single battery.
Enter Bluedot Innovation, a South Australian firm that has filed patents on a new invention that claims a few meters accuracy without using a GPS by using GPS but not in its normal operational method which reduces power consumption and a ring fencing technology that allows them to setup a virtual perimeter around a location and bill mobile devices as they enter.
They are one of the graduates from the ANZ Innovyz Accelerator program in Adelaide and are currently in negotiations to raise a seed round. Interestingly one of the co-founders Emil Davityan has an extensive work history in Government policy and cyber security, as an adviser at the Department of the Prime Minister and Cabinet and most recently as a national security and international policy adviser, focusing primarily on cyber security policy. This is definitely going to help them win new business and take advantage of any Government grants and funding.
Emil Davityan – Co-Founder, Executive Director
So far they seem to be taking a very unusual approach to raising capital for a start-up, they had appointed an Adelaide Stockbroker who is leading a $900k placement for them with their private clients, this probably has some upside in that they have a sales team working to sell the issue, unfortunately this will probably come with a hefty fee, I stand corrected apparently the fee was better than they were quoted from startup focused advisors .
I spoke to Co-Founder Filip Eldic about the technology and what had happened in the time since they launched the company.
Filip Eldic – Co-Founder, Executive Director
What has surprised you so far on your Start-up journey?
The biggest surprise for us was how established the Australian Entrepreneurial ecosystem was. Following input from most individuals we spoke to our expectation was that we would struggle to find clients, investors and any supporting services in Australia as a whole, let alone South Australia. To date we have found investors, clients and support services ranging from capital raising companies (Baker Young Stockbrokers), top tier law firms (Minter Ellison) and some of the best accounting institutions in the world (KPMG) where all have come on board at very favourable commercial terms and all in South Australia.
We are not a traditional software as a service provider that seeks to sign up customers and gain market traction by end consumer awareness and organic uptake. While it was our original business model, we realised that our market reach, profitability and potential of the technology to revolutionise how we use smartphones in general could only be reached by spreading our technology far and wide to make it the de facto standard for geolocation services and more importantly for location based commerce. To this end we went through an early pivot (we originally wanted to create a mobile tolling platform and become a service and payment provider) and reoriented towards becoming a technology company that licenses its technology to large organisations that could benefit from it the most, following a B2B model. Our final offering will be a SDK offering 3 levels of functionality that we are currently designing and will go into production shortly.
Tell us about your Start-up War Stories?
We have had many start-up war stories. The most interesting one that comes to mind was a moment in the ANZ Innovyz Start-up accelerator. We were going through a round of mentors and had a session with a mentor that plays a global role in one of the largest tech companies in the world. We had high hopes for the meeting and went in very excited and enthusiastic about the input and validation that this mentor could give us.
Within 5 minutes of us explaining our technology and original SaaS business model the first words to come out of his mouth were:
“You are going to fail. Let me be clear on this: there is no chance you will succeed and even if you tried you will need 2 million dollars to even develop a prototype that will not work.”
(Ed: what a shocker)
Needless to say it was one of the toughest moments of our journey. However, it was also one of the most important ones that gave us the strength to sit down, examine our current model, scrap what was wrong and re-orientate towards a new one that was not only more likely to succeed, but also one that was infinitely more scalable. Sometimes the best outcomes can came from the worst moments. It was a hard thing to learn but the most important lesson we learnt.
What is your biggest focus?
Right now the main game is getting our SDK finalised, however once it is complete we intend to expand internationally very quickly. We have created an extensive strategy regarding this point. We are currently raising up to 900k as an initial round that will allow us to scale the back end of the business in terms of client servicing staff, however the SDK will naturally be scalable as it is a software package that will be delivered and in its entirety run by our clients internally. This allows us to scale only our client servicing capabilities with the scaling of the actual technology and its use cases left to the capability and resources of our clients.
We have created the system to be technically very scalable from the beginning (e.g. our back end is based on Mongo DB that allows users to host the CMS on multiple servers (a practice called Sharding) regardless of location or type (in house self run servers, external servers or on the cloud)). We have also created significant networks globally and particularly in the US that will allow us to expand very quickly. While our main advisor sits on the board of the Bill and Melinda Gates Foundation and is a veteran of Silicon Valley we have also ensured that we have pathways open through various networks that will allow us to reach some of the largest tech and payment companies in the world.
Any big mistakes you are willing to admit to?
One of the biggest mistakes was misjudging which part of a vertical to approach in our attempt to penetrate a market. As you may understand given the NDA obligations we are under I can not reveal the actual company in question, however I will do my best to elaborate. We tried to approach a company that was an end provider of a service to the general public. Our technology would provide them significant benefits, both operationally and strategically, however we misjudged how hard the sale would be in a slow moving industry. We wasted several months on market research, approaching them, flying interstate for meetings 3 separate times and ended up at a dead end. It was a very disheartening moment for a young start up and while we wasted a lot of time and resources, we learnt from our mistake and have since approached a supplier of theirs higher up the food chain that provides the underlying technology they use. The provider has been much easier to deal with and has not only quickened our sales cycle in that industry, but also given us the ability to impact a much wider market, given that they are a global player.
What is the best thing you have done so far?
The second best thing we have done is building relationships. We have made it our priority to ensure that all the companies and people around us and those that have helped us in particular will benefit from our success. Start-ups to often focus on “keeping all the marbles” and end up with none in the end because they have shot themselves in the foot. We have been very quick to thank and promote all of the companies supporting us in all media stories and all of the times we have had a chance to do so personally.
However the best thing we did was to participate in the ANZ Innovyz Start Accelerator program (Fully funded 3 month program with access to a global network of expert mentors and investor opportunities to accelerate your business).
The program allowed us to grow 12-24 months in a 3 month window and opened doors that we could usually not even knock on. More importantly the program potentially also saved us from ruin. Our original plan was to be a software as a service provider pursuing a slow moving industry with a non scalable business model. Through the advice of the mentors within the program we quickly realised the collision course we were on and managed to pivot quickly and cleanly to the tech licensing model we operate today.
What are your next big Milestones?
Our next milestone is definitely our SDK. We are currently looking to design a 3 stage SDK. The first stage offering our patent pending geolocation technology that can achieve geofencing precision of up to 2m with minimal battery drain. It will also entail a high level of customisation regarding location determination characteristics and some other wonderful stuff we are currently preparing a patent application for (I cant talk about this yet however it is a significant enhancement to our even now innovative tech).
The second stage will entail all from the previous but also location based marketing capabilities as well as location based loyalty programs and location based analytics built in. The last stage is our full potential uniting the capabilities of the previous two along with a full location based commerce solution that will entail an attached payment gateway and receipting system. Timeframes around the SDK and how we will roll out each stage is still fluid, however we think we should be in a position to deliver the first stage very shortly indeed.
It also may be worth mentioning that we are also providing some additional inbuilt services and considerations as a part of the base offering. Given the sensitivity of the software in uses relating to location based commerce we have established a relationship with BMM Compliance, a government accredited testing and auditing company that specialises in auditing software in highly regulated industries such as gaming. Their assistance will allow us to deliver a robust and reliable system to our clients.
Have you taken funding?
To date the business has been financed through the contributions of the two founders and some very limited debt financing.
We have currently raised $225k from a group of Angel investors in South Australia (funds are closing this week). This is effectively our seed round that will be followed up with our main round (a de facto Series A) that will be led by Baker Young Stockbrokers. In this round we will be approaching large strategic partners such as large VC funds that will provide us with additional expertise and connections as a compliment to the funds that they invest. We will be looking to raise an additional sum of $600k in this round that will kick off with our IM that is currently being completed with the support and expertise of Baker Young Stockbrokers.
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