I'm writing this on a ferry over from Tallinn to Helsinki coming back from a pitching event we organized in collaboration with Enterprise Estonia as part of the second annual International Technology Law Association conference in Tallinn, Estonia. The pitch competition was held with support from Connect Estonia. I very much enjoyed the conference as it mixed nicely technology law and venture capital finance. There was some interesting comments from a top-of-the-line Nordic and Baltic VC panel, but I'll get into that in another post. Here's about the line up of companies that pitched themselves to the jury.
Based on the application process five startups had made their way into final pitch competition. Here's some thoughts on each of them.
Fits.me, an Estonian startup, won the competition. Fits.me is currently in private beta and just recently raised €1.3 million round, some of which is from Enterprise Estonia, the rest from private investors. The company's product is robots for fashion industry or as they put it 'Virtual Fitting Room' for online retailers. Fit.me aims to solve the problem of high return rate in clothes sold via Internet by a robot that can emulate for all the different body sizes and shapes out there. According to the pitch, the solution would lead to reduced returns and subsequently increase profits a whopping 25% to 50%. The company has already a prototype ready and looking for clothing retailers as testing partners. The jury, quite rightly, was curious how do the robots get the shoppers body size and shape right. Fits.me was quickly to point out that by taking only a few measures, which are then compared to models in their data base, they are able to derive all the other measures. Selling clothes online is currently a $26 billion industry and expected to grow to $120 billion in five years.
Programeter, an Estonian startup, scored second with their product, a reporting automation and analytics solution for software development projects. It aims to give managers an increased level of transparency and eliminate reporting burden from team members by providing the core set of indicators collected from task, time, bug tracking tools and code repository. The company uses the SaaS-business model. The company estimated their market to grow to $3.3 billion in 2009. It also estimated that there are 17,000,000 programmers worldwide today. Programeter boldly claims that their solution saves time worth of $17,600 for already a 10 developer strong team. The company has already received seed funding from Ambient Sound Investment and Rate.ee founder.
Third place went to Snap Group, a Finnish startup. Snap Group's flag ship product is Sumo Paint. Sumo Paint is the first and so far the only one of the company's product family. You could say it's a Photoshop to be used in your browser (Think Pixlr), but a social one. The social dimension means you can share and comment other people artsy drawings and photos. The founders believe the community they have build around the product is one of the most important pieces in the offering and see their product not just as a tool, but a product mixing a game like environment with a tool functions. This would make it an ideal for example for young kids to learn different skills in a game like easiness. Monetization is quite predictably build around freemium offering.
In addition to the Sumo Paint, Snap Group will already next month launch a music product, Sumo Tunes. Later on follows Sume School. Interestingly when the Jury had a chance to grill the company with questions, one of the jury members asked the company which offer the startup would choose if they were offered a generous cash acquisition by Adope, Google and Facebook. They chose Google, which is very telling how they see their position in the market with a product that can be in several categories.
The last two companies that made it to the pitch competition but did not get chosen by the jury were Clusterpoint and Crystalsol. These were also the companies with the most inconvenient products out of the 5 startups to pitch in 5 minutes due to the complexity of the respective solutions. Clusterpoint describe their service as 'The product can be described as Fast, Scalable, Entirely Searchable, XML database, where you can manage your information as complete and undivided XML data objects, so that you can reduce cost and complexity within your business.' A mouthful for sure. Even if the solution is not that complicated, I believe the company lost the pitch mostly because of a bad pitch, not because of a bad product.
Crystalsol's technology converts sunlight to energy, and is thus naturally somewhat complex. Crystalsol develops an entirely new type of flexible photovoltaic module with a significant cost advantage compared to all currently known photovoltaic technologies. According to the company, the technology leads to cost reduction of 70-80% compared to current industry average. Considering the most aggressive projected price decline until 2013 this implies a future cost advantage of 20-30% achievable already at low scale production. That said, the company admitted that they need to raise a further €7 million (they are nearly completed a 3 million round) before they can ship the product, and a full production line would demand an extra €25 to €30 million. Again, not necessarily a terribly complex offering but needs a bit of industry understanding and more than five minutes to understand the ins- and outs of the product. You can fit only so much into five minutes and trying to do exactly that may sometimes turn out to be not such a good idea. Too much information to a certain audience is as bad as too little.