Paul Wallbank – Brilliant Communications

Tag: investment

  • A great time to raise funds

    A great time to raise funds

    “There’s great availability of capital for young companies,” says Doron Kempel, the CEO of software defined data center company SimpliVity.

    Since being founded in 2009, the company has had five rounds of funding and raised $276 million dollars in equity and debt.

    The notable thing is Kempel says the banks are keen to lend money to his business, something that probably underscores how difficult it is for banks to find suitable places to place funds.

    As one of the unicorns – Simplivity’s last fund raising gave the company a valuation of over a billion dollars – it shouldn’t be surprising that banks are comfortable lending money to the business but it also underscores just how much money is available to startups with the right investors.

    For those investors the paper returns are good as well, with Kempel observing each round of funding sees the company’s valuation triple.

    So for companies with good ideas and unique stories it seems right now is a good time to be raising money, particularly if the founders can get one of the pedigree venture capital firms to invest.

    The question now though is how many coffee apps and delivery services can the also ran VCs support?

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  • The tough world of IoT hardware startups

    The tough world of IoT hardware startups

    Yesterday Internet of Things startup Ninja Blocks announced it was shuttering its doors after three years of operations, two successful Kickstarter campaigns and three successful fundraising campaigns that netted $2.4 million.

    Ninja blocks aimed to become the centre of the smarthome with its simple controllable device but, as many other startups have found out, the costs and complexities of designing, manufacturing and shipping hardware are not trivial.

    Last year I spoke to Ninja Blocks and a similar IoT startup which also failed, Moore’s Cloud, about their opportunities and challenges. In the light of both companies failing they are worth watching again.

    Daniel Friedman, CEO of Ninja Blocks outlined the company’s plans along with the limits of crowdfunding.

    The CEO of Moore’s Cloud, Mark Pesce, had much stronger views on crowdfunding and its limits.

    From the Moore’s Cloud and Ninja Blocks story it would be tempting to conclude that pure IoT hardware startup plays are doomed to failure, however the lessons of companies like Fitbit and the Pebble watch show otherwise.

    A very good example of success is Spanish IoT company Libelium whose founder and CEO Alicia Asin told Decoding The New Economy two years ago how the company had started under the shadow of the 2009 economic crisis and thrived since.

    The failure of Ninja Blocks and Moore’s Cloud really tell us we’re in the early days of the IoT and the business models and technologies are not certain. It’s also a commentary on the risks involved in startup businesses, as investor Dave McClure says, “not every one will be a unicorn.”

    As the markets grow and the technologies evolve we’ll be seeing many more IoT startups, few will become billion dollar unicorns and many will fail. That’s the nature of new industries.

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  • Rolling out the smartcity – the role of government and business

    Rolling out the smartcity – the role of government and business

    “It’s amazing what can be achieved when government is committed and prepared to partner with industry,” was the AIIA Internet of Things summit MC’s reaction to a presentation from Steve Leonard on Singapore’s quest to become a connected city today.

    Leonard, the head of Singapore’s IDA, had laid how the nation had embarked on a smartcity project due to the pressures of increased population and an ageing society. The government sees technology as a way to deliver health services more effectively and use scarce resources more efficiently.

    One of the areas Leonard cited was in traffic management where the city’s bureaucrats asked “how can we double the traffic on our roads without building anything new?”

    The answer lies in smartcars and autonomous vehicles, Singapore has partnered with MIT to run a driverless car pilot on some of the city’s roads. Leonard points out that cars can travel closer together when run by computers rather than being driven by humans.

    For governments traffic management is one of the easiest ways to introduce the internet of things into smart cities says Lutz Heuser, Chief Technology Officer of Germany’s Urban Software Institute.

    Heuser worries that many cities are “sitting on the fence” when it comes to rolling out IoT and smartcity initiatives and sees “the humble lightpost” as being one of the ways technology can be rolled out into urban environment.

    Smart censors in the street lights
    Smart censors in the street lights

    This echoes the Geek’s tour of Barcelona where street light poles are a key part of the city’s digital infrastructure, providing a base for sensors and the Wi-Fi connectivity needed for devices like intelligent rubbish bins and digital services.

    One of the advantages of using intelligent, or at least half smart, lightpoles is that local governments are replacing them on a regular basis – around three quarters of Europe’s poles are more than twenty-five years old – which means they can be rolled out as part of a planned maintenance programs.

    Having rolled out connected city initiatives like Barcelona’s smartbins or Singapore’s ‘fibre hydrants’ – fibre nodes around the city that government and emergency services can tap into when needed – local businesses can then leverage off that infrastructure to further improve the well being of citizens.

    For governments, the rolling out of smartcity technologies is to deliver better services more efficiently. As Singapore and Barcelona have showing, by working with local businesses it becomes far easy for agencies to deliver real improvements in their communities.

     

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  • Beating Facebook envy

    Beating Facebook envy

    Do economies and businesses need to be at the cutting edge of tech or is staying behind the early adopters the key to get the most out of technology?

    “Everybody has Facebook envy,” says Oracle’s Neil Mendelson, the company’s Vice President for Big Data, about business life in Silicon Valley.

    Mendelson was talking about how the Silicon Valley business environment is a high pressure bubble where the focus on shipping products is different from the needs of users outside the tech sector.

    “The farther out you go from Silicon Valley the more people fundamentally understand the value is in getting something out of it,” says Mendelson who was speaking at an executive lunch in Sydney earlier today.

    “Being a late follower has an advantage because companies aren’t going to get fired up about this Facebook envy trying to assemble a solution but rather they can get something out of the cloud that will deliver value.”

    The Minitel problem

    An example of being too far ahead could be Minitel, a text based network operating across France between 1982 and 2012.

    Minitel was a visionary project intended to deliver services similar to the Internet through a dedicated terminal, however the open nature of the net made the French service less than attractive and eventually France Telecom wound the service up in 2012 as user interest evaporated.

    How much the French bet on Minitel held the nation’s digital economy back is open to question, the World Economic Forum lists France as 25th in the world in its 2014 Networked Readiness Index however the gap between most of the top nations is quite close.

    Falling off the bleeding edge

    The idea that the best return on a tech investment is by being behind the ‘bleeding edge’ isn’t new, for years the advice from serious computer experts was to never buy a Microsoft product until version three came out however there is a risk that the early adopters might get an early advantage over the slow movers.

    Another risk is missing out altogether; as Oracle’s Australian manager Tim Endrick told the room, “our experience is organisations are doing two things; they are either managing disruption and/or they are leveraging their structures to innovate. Those who are sitting on the back step doing nothing are in serious trouble.”

    So while there are risks with being too an early an adopter of new technology, it’s important to be aware of the trends and tools that are changing business.

    With the pace of change in both technology and industry accelerating, it may be that staying too far behind the cutting edge risk falling off altogether. Maybe it’s worth being envious of Facebook.

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  • Managing the great transition

    Managing the great transition

    At present the global economy is beset with low expectations; trade is at its lowest point in 20 years, many of the worlds economies are teetering on the edge of depression and investment is barely keeping ahead of depreciation.

    The world is slowing and The Great Transition report by Colonial First State Global Asset Management looks at the reasons and some of the effects of this change.

    Senior economic and market research analyst James White suggests in the report that the current state of affairs is a permanent shift as global productivity rises due to Chinese production and the widespread digitisation of most industries.

    Compounding the problem in White’s view is the traditional measures of economic growth understates the size of the service economy as between ten and twenty percent of transactions go through the ‘black economy’ in most countries.

    In looking at their own field, the Colonial First State researchers suggest that investment strategies are going to change as ‘capital light’ industries begin to dominate advanced economies.

    While White and his co-author Stephen Halmarick are optimistic about what the changes mean and suggest a focus on people and attracting global capital as the key to competing during the Great Transition, the challenge is on policy makers to increase human capital in their economies.

    The question though is what can individual countries do to be competitive in this context? While nations like Switzerland and Singapore can quickly develop pro-investment policies, it’s harder for larger and more diverse societies.

    Perhaps the services driven economic model is really only one for high wealth, small nations with well trained and skilled workforces? If that’s the case, then the Great Transition might be a tough time for many of the world’s developed economies.

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