The Pitch, the yearly Israeli startup competition organized by accounting firm Ernst & Young, came to a conclusion last Wednesday with the VR startup StepInside announced as the first place winner. The company run by a strong team that created a top notch VR tech, is probably a future M&A by either Facebook, Google or Microsoft.
Zirra partnered with EY to supply judges with trusted insights that included a map of competition and the list of success and risk factors for each startup.
Of the 26 candidates presented at the semi-finals, eight companies passed it to the finalists' stage: Aerial Guard, Atidot, Fitfully, Getalert, Global Solarchange, Precog, StepInside and Versatile Natures. We at Zirra Picked some of those companies and other companies that have participated at the semi finals and inspired us the most. But let's begin with the winner.
Click on the links below to get to Zirra's full pages on each contestant.
Stepinside embedded a scene from the original Star Trek with William Shatner being teleported from the deck of the Enterprise and, frankly, that’s why we loved them.
As in space teleportation, StepInside enables users to teleport themselves, in their real form, into a colorful virtual reality world. It is a platform for 3D VR communication that allows a full-body three-dimensional avatar of real-life "you" to engage in activities like dating, chatting or even business meetings. You only need a 3D sensor, such as Primesense or Intel, and a VR headset to watch the other “you” and your friends together.
Zirra's insights on StepInside
StepInside uses top notch computer vision tech and video streaming algorithms that not only transform your whole body into a live avatar, but also completes missing parts of your virtual body, a recurring fault in most of the existing imaging technologies.
This company is based on a strong duo of two experienced founders that truly compliment each other. Co-Founder and CEO Assaf Chaprak was formerly VP of Account Management at the video giant Kaltura, while CTO Eran Guendelman, a computer vision wizard, was one of the first employees in PrimeSense, the 3D sensor maker that was acquired by Apple for $390M. The investor behind the company is Kaltura’s CEO Ron Yekutiel, Chaprak's former colleague. He has invested $250K and, for all we know, this is the first investment by Kaltura’s CEO so far.
We gave the management team a rating of 8.2, a rating slightly hampered by the fact the company seems to be operated by the founders only with no indication of the existence of a team behind them.
However, StepInside is the classical case of a company that is built right for a fast exit, similar to Oculus who was acquired less than 2 years after its Kickstarter campaign, and to Pebbles, who was acquired by Oculus less than a year after it pivoted to hand tracking technology for VR headsets. Potentially, any VR/AR headset can, and maybe should, acquire StepInside. Potential suitors include Microsoft, Oculus, Samsung, and even Magicleap, who is considered a direct competitor as its mixed reality platform aims to make life-like objects or people appear as if they are in front of you in the real world.
Fitfully, headed by a former Sky News IT development manager, wants to solve the problem of the least advanced online retail industry: shoes.
Fitfully launched an app that takes a 3D scan of the user's foot and produces an accurate model which will be used by the fitting engine it has developed. This fitting engine places and aligns the user's 3D virtual foot "inside" a shoe to ensure its accuracy. Users can share their 3D foot with others so that customers can accurately buy shoes for friends and family.
Fitfully’s API can work with any e-commerce website and the company claims that embedding the code is simple and will not disrupt the site. Online stores can also integrate with Fitfully’s mobile scanner and technology that offers a dashboard which can track inventory and generate shoe or user specific data.
In spite of this technology it seems investing in shoe-tech can give one cold feet. The history of companies that tried to match automatically a foot with a shoe is as long as the history of the technology itself. Indeed, the startup graveyard is full of them. Zirra’s memory goes back to 2008 when Fitracks, an Israeli foot hardware scanner, was sold to Aetrex for an unknown sum of money - probably a "firesale". The founder of Fitracks was Yair Goldfinger, Co-founder of ICQ, which was acquired by AOL for $400M and Dotomi who was acquired later by ValueClick for almost $300M, so the stakes were high.
Fitracks developed iStep, a digital foot analysis system, offered as a free service to consumers at airports and shopping malls. The system allows users to step in and create a computerized 3D model and then match it with recommended shoes. The company still exists but it didn’t become the Zappos of the auto fits.
Fitfully: matching your 3D foot scan to a shoe
But you don’t have to go as far back as 2008 to see that. Fitfully faces competition with several companies, such as the Swiss-based Right Shoes. This is a small company that raised less than $100K so far and today is already working with Kappa, Diadora, Timberland and Asics. Fitfully raised $810K and claims to be in a beta testing period with vendors such as Saucony, Keds, and Hush Puppies and is already working with Adidas. Right Shoes not only uses a mobile app but is also sending fitting machines to stores, as is Corpus.e, another competitor, while vFit shoes has launched an app that is similar to Fitfully. In addition there is Shoefitr, which was acquired by Amazon last year. It is not a true competitor, states Fitfully, as it doesn’t use a precise model of the foot but is primarily focused on matching a model of a favorite shoe or size with other shoes you may like.
Yet, Fitfully's potential market is huge. 35% of total online purchases of shoes are returned back to the store, 90% of those because of poor fits, costing online stores $4.90 on average per return for restocking. The entire shoe market is estimated at $265B, but the online share is only 8%, meaning most of the growth is still ahead.
AerialGuard joins the group of tech Israeli companies that, according to TechCrunch, are leading the drone technology landscape. AerialGuard develops a combination of sensors and processors for high-level autonomy in drones. The system, which is based on the human decision-making process, uses a navigation program architecture that provides the drone with context based mission planning, sense-and-avoid capabilities, and intelligent behavior in the drone. The company was named as one of 12 emerging companies by Nvidia and also won the 2016 Global Innovation Award.
AerialGuard presents a well-defined software product that will enable drones to navigate in a mission and avoid obstacles. It also features a team of Technion graduates, ex-Rafael and IAF experts, giving them a Zirra rating of 8.3 out of 10. But the drone navigation system industry is very crowded, even if you narrow your perspective to the Israeli industry only. Airobotics, who developed an autonomous drone capable of recharging its own batteries, raised almost $30M in two rounds, while Percepto, a maker of a computational vision engine for autonomous drones that allows them to identify places and follow mobile objects, raised $1M from Chinese and American investors.
And then there is Arbe robotics, which won a TechCrunch Pitch-off competition last June after declaring it had developed sensors for drones at a fraction of the price of those that are being developed based on image processing. Arbe's sensors should be energy efficient and would keep the drone in the air for longer.
AerialGuard, it seems, raised so far only $250K from prize money and plans to launch a commercial product within the next year. Unlike its competitors, it is a software-only company, putting much effort into navigation capabilities and optimization of sensors such as Lidar or 3D sensor.
Still, there are major questions asked about the market adoption of navigation systems for drones, whether it’s AerialGuard, Percepto or Arbe Robotics. The majority of drones flying today are toys sold to the end consumer market and those that hit the industrial market are generally pre-installed with the flying path. The majority of the optical solutions for drone navigating requires the drone to fly slowly, so their market is still very small.
Besides, the dronr market might be a giants game. Amazon, or even DJI, might come out with a navigation system that will wipe out the smaller player of the industry.
Managed by a young lawyer and his jewelry designer wife, Julbox combines business skills with a sense of design. They've developed a platform on which users can design as many pieces as they want for free while paying only for the jewelry they eventually purchase. Once a user decides to purchase their design, it will be professionally cut, polished, plated, shined, assembled, boxed and mailed within seven days of purchase. Making it customer friendly, users also don’t need training in order to design their jewelry.
Julbox recently ran a successful pilot in Israel and is getting ready to go commercial before moving into the US market. In 8 months of beta testing, Julbox already has 14,000 registered designers and has sold 1,000 jewels. 15% of all sales is retained as a fee and the company reports that it is already profitable.
The online jewelry market is estimated at $3B a year in the US alone, and the Z generation people are already accustomed to consumer products they helped create on the internet, as well as purchasing luxury goods online.
However, the personalized jewelry market is already quite crowded. It features companies such as Jweel and even Wizegem, another Israeli company that offers two different design products: one for the home users and the other to professional designers.
Besides, the biggest tech and innovation companies in the jewelry field are also jewelry online stores like R2Net and MyNameNeckless. But Julbox doesn’t see itself as a jewelry company. Rather, the idea behind it is to convince users that they should design jewels instead of just buying them.
Trench is a clothing exchange network founded more than a year ago in Israel. Recently, the service is being tested at Northwestern University, its first pilot in the U.S.
This is a social network, launched first for women, allowing them to buy second hand clothes using a virtual currency called “Diamonds”. A user can earn “diamonds” by uploading and selling items, meaning users don't have to pay real money in order to start doing business at Trench. The app is using a location-based search and users can collect clothes from stores in the neighborhood, including leading apparel chains. The company reports on a conversion rate of 27% for its advertising campaign, and an average of 4.5 purchases and 30 minutes of time spent on the website per user.
The second-hand market is estimated at $15 billion to $18 billion, so the opportunity is potentially massive, but there are also many risks factors for Trench. First, Americans might feel less comfortable than Israelis to wear other people’s second-hand clothes. And second, the US is already packed with dozens of garment renting, swapping and exchange apps such as Gwynnie Bee, Rent the Runway, Le Tote, Borrow for your Bump, Swapdom, Darpdecade, and Swishing.co.uk, which also uses virtual money.
It is a huge challenge for startup from Israel to be able to convince American and British women to swap second-hand clothes after so many American and British startups had failed to do so. Building a clothes swapping startup for a niche market might be a more viable business case. For instance, Gwynnie Bee, founded by serial entrepreneur Christine Hunsicker (RightMedia), is targeting the plus-size women’s apparel market.
Vala is a new remittance service targeting unbanked customers primarily in developing countries. Current obstacles result in unreliable and expensive remittances in this ever growing segment, demonstrating the need for better solutions. Vala sees themselves as the Uber of money transfers and combines risk science, machine learning and "human ATMS" in a bid to reach customers worldwide. Money is collected by presenting a QR code to the “human ATM” and by using technology for risk management and anomaly detection, Vala hopes to lower the risk of these cash transfers and pass the savings on to the customers.
Vala was founded in 2015 by a team of ex-PayPal, E&Y and BDO employees. Shortly after founding, the company was selected in 2016 for Barclays’ Techstars accelerator in Tel Aviv, which focuses on FinTech.
Vala Pay chose to launch in India, a massive remittance market, and has stated they are onboarding with 150K local affiliates to serve as cash pick up points. The company also says it has an Indian backer supporting the company and its Indian venture.
The market for companies such as Vala is infinite: In 2015, Global remittances amounted to $581.6B, $431.6B of which was to developing countries where up to 60% of people are operating without bank accounts that can facilitate traditional transfers.
But Vala is a newcomer to an already crowded market of remittance startups. Some of them are offering remittance through Bitcoin and Blockchain infrastructure and almost all of them are working with developing countries. In its home country Israel, Vala is facing competition from Rewire and Neema, which allows remittance to the Philippines based on blockchain and is offering a complete suite of banking services, including loans. Outside of Israel, Vala will have to find its competitive advantage and compete with Abra, Azimo, Xoom, Remitly and World Remit.