Full Startup Investor Portfolio Update

Dear Startup Investor,

In today’s alert I am going to give a full rundown on our current portfolio.

This week she’s in San Francisco, showing off her messaging service at Launch San Francisco. Good luck, Natalie. Some of the speakers and judges include Mark Cuban, Paul Graham, Tim Draper and Matt Ocko.

This event has a pretty good pedigree. Over the years Dropbox, Yammer, Red Beacon, oDesk, Boxbee, Adstage, Boosted Boards and others have debuted or appeared there.

Next Up: Austin’s SXSW

Ansa then takes the stage in Austin on March 7 at the annual SXSW (South by SouthWest) event. Ansa will, of course, be promoting its messaging service. But Natalie will also be announcing the release of the faster Apple-approved 2.0 version of Ansa’s messaging application. We’ll soon find out if she can draw a crowd at the Startup Village like the one pictured below (from this event).

Just Saying or Asking

“You mean we’ll finally be able to buy the new version on iTunes?” I asked Natalie.

“After March 7, Andy, feel free,” she said, adding, “You won’t believe how much faster it is to use.”

Can’t wait, Natalie, can’t wait.

Update on MST

MST is making great progress in both the U.S. and Europe. But the devil is in the details. So let’s talk Europe first.

What you know already: MST has clinical trials underway in Italy and the Netherlands.

What’s New: Europe

MST has begun a soft launch in Europe. It’s targeting a handful of medical centers, especially those in the Netherlands. And it expects to sign its first distribution partner in the Netherlands around late summer.

MST is also making headway in its search for a major “collaboration” partner. Several large companies have already visited MST. Further visits are scheduled for the last week of February.

Good Reviews Continue to Roll In

I told you in my original report that MST was getting positive feedback from surgeons using its system. That continues to be the case. CEO Motti Frimer says surgeons “are enthusiastic about the potential of the system to allow them full control in a user friendly manner.”

What’s New: The U.S.

Motti is now turning his attention to the U.S. Come April, he’ll demonstrate his system at upcoming SAGES conference in Salt Lake City. The company is eager to learn what specific areas (bariatric surgery? colorectal surgery?) MST’s video system would provide the most (and most needed) benefits.

Motti hopes to begin the process in Salt Lake City of developing a better idea of these critical issues. Then follow up with U.S.-based clinical testing and fieldwork to test and confirm any conclusions reached.

The testing should deepen MST’s understanding of what U.S. surgeons need and how MST can make adoption of its system by hospitals and clinics as seamless as possible.

An Increase in Revenue Generation as Early as End Of the Year

I asked OurCrowd’s Jon Davidi when we could expect a full-scale rollout of its Autolap system.

He said if not late 2014, then definitely in 2015.

Remember, from selling its system for clinical testing, MST will make around $500K this year. If they begin their full-scale marketing this year, that number will grow. How fast depends on whether it books the revenue when the order is made or when the payment is made (it varies from company to company).

Just Saying or Asking

“So, “ I asked Jon. “MST’s strategy of ‘first Europe, then the U.S.’ is proceeding right on schedule, right?”

“Absolutely,” Jon said. “It’s full steam ahead.”

Good to hear.

Update on SpeechTrans

From Spain to Saudi Arabia, SpeechTrans is delivering deals and progress in equal measure, including one game changer.

Mobily Is the First Big Deal

Let’s start in Barcelona. SpeechTrans is there right now, at the Mobile World Congress closing a deal with Mobily. Never heard of Mobily? It’s only Saudi Arabia’s fastest-growing mobile communications provider. Check out its many services…

You can add one more service: translation, courtesy of SpeechTrans. Mobily had around 20 million mobile subscribers at the end of 2011. Now they’re well over 30 million. FYI, SpeechTrans added three dialects of Arabic to its growing list of languages in 2012.

MTN Is the Second Big Deal

SpeechTrans’ other big international deal comes from West Africa, where it inked a pilot services contract with the African Telco, MTN. MTN connects more than 203.8 million people in 22 countries across the Middle East and Africa. The pilot program will run to the end of June this year. By that time, SpeechTrans expects to add its landline machine translation service “InterprePhone.” It’ll be available to companies via a “IntelliConference for Business” hookup or – just how consumers would use it – in one-on-one conversation.

Either way, customers with access to SpeechTrans’ premium service also can get live translation services by more than 16,000 interpreters.

If all goes well, SpeechTrans will seek a longer-term contract that would cement its presence in this lucrative market for years to come. Projected revenue for MTN in the first year is $12 million, based on 50 million users. SpeechTrans would get a cut of that.

At that point, SpeechTrans would be well on its way to accomplishing its “disruptive” industry goal of becoming the go-to “Language Line” for global Telcos worldwide. Why disruptive? Because SpeechTrans would be giving Telcos fully human-powered translator systems (via their hybrid machine/human telephone translation services) at one-tenth of current costs!

Busy With the Big Three

SpeechTrans is also working on major initiatives with its big three partners, Microsoft (Nasdaq: MSFT), HP (NYSE: HPQ) and Intel (Nasdaq: INTC). It’s launching “Hearing Impaired” on Windows 8 with Microsoft. It’s working closely with HP on increasing conversions from free trials to “paid-for” upgrades. And it will be using the cash it got from Intel to launch a major marketing campaign of its translation services, beginning in March.

Now For the Biggest Development…

It’s the new and improved SpeechTrans Ultimate, allowing customers to communicate seamlessly across multiple platforms.

SpeechTrans users will be able to chat with each other no matter what platform they’re on. One person may be on her Facebook page at home using her computer. The other person out and about, using her smartphone. Speaking different languages, of course. SpeechTrans Ultimate will allow them to communicate seamlessly.

It’s the game changer I’ve been eagerly anticipating. Beyond just using SpeechTrans as a translation tool while traveling abroad, it will facilitate global communications between countries and peoples. To make it happen, the company has just hired four additional software developers and a former Microsoft/Nokia (NYSE: NOK) designer.

Latest on Fundraising

On the fundraising front, SpeechTrans is still reaching out to Oxford Club Members. It has raised well over $150K so far. And help from one enthusiastic Member of The Chairman’s Circle should double, or maybe even triple, the company’s current raise amount.

In other words, SpeechTrans is speeding ahead on all fronts.

Just Saying or Asking

I asked John, “Now that you’ve hired five more people, will you be able to ease up a bit?”

“Are you kidding?” John said. “What’s the old expression? Do something you love and you will never work a day in your life. What’s not to love when we hear feedback from customers who say our App has saved their patient’s life? This is what fuels our passion to keep pushing forward every day.”

Well said, John. But, of course, you knew I was kidding, right?

Update on Appvance

When I caught up to founder and CEO Kevin Surace yesterday, he had just come back from a two-week “engineering huddle.” His technical staff was putting the finishing touches on the release of the cloud version of their platform, where companies can access Appvance’s “deeper, broader and better” diagnostic testing.

“So, what’s the next step, Kevin?” I asked.

Major Lead-Gen Campaign Around the Corner

“We’re going out with our big lead-gen campaign starting in March,” he replied.

Now, lead generation is something we know a little about at The Oxford Club because we do some of that ourselves. So when Kevin said he had a 16-tactic lead-gen campaign, I was suitably impressed.

“We have different strategies in targeting different groups of companies,” Surace explained. “One includes one-on-one meetings at CIO forums. Another, driving strong article pickups. One tactic will be Facebook-centric and one LinkedIn-centric. We’ll be writing articles. Doing SEO (search engine optimization). And working with outside telemarketing firms who can target the CIOs and VPs at global 5000 companies. Also getting companies to request demos via our website. It’s going to be exciting,” said Surace.

“But not inexpensive,” I commented.

Surace agreed. That’s where the fundraiser that many of you contributed to comes in. It was a smashing success.

Surace set a goal of raising $500K but ended up with $1.45 million. He hit well above his target and will officially close out his Series A round as soon as the final paperwork is complete. Just in time to implement lead-gen.

The revenue will follow by fall, says Surace. “We’ll be getting the real results starting around September.”

“It’s a six months sales cycle but building pipeline is critical. We will be measuring results every single day from the lead efforts.”

All About Awareness

He told me getting companies to find us is a process.

“When companies have been using the same diagnostics for 20 years, there’s a certain, well, not loyalty, more like inertia. If these CIOs were honest with themselves, they’d realize immediately that what we have is vastly superior to what they’ve been using. After all, the last performance testing tools generation dates back to 2005.”

“So how do you convert them?” I asked.

“It’s all about making them aware of what we offer,” Kevin said. “They come around eventually. But we expect the sales process to take about six months for most of our prospective customers. That is standard fare for winning large enterprise accounts. We have the best technology on the planet… we just need to jump through all the hoops.”

In my original report to you, I said Appvance has 50 accounts in its pipeline. Surace says they now have more, many of them already engaged in back-and-forth discussions with Appvance.

One is from a “major tech-networking company in the Bay Area,” as Surace describes the company. It has already developed “a deep technical understanding” of what we do. “We’ve won the tech evaluation,” says Surace. “Now it’s just a matter of getting this potential $400K account through the budgeting and procurement processes.”

Just Saying or Asking

“Anything in particular you’d like to say to our Oxford Club Members?” I asked.

“We’re on our way, in part thanks to investments made by your Members. So tell them to be patient. I’m excited. The company is exactly where it should be, already with solid revenue and on the cusp of major revenue expansion. Reeling in the Fortune Global 1000 companies is a bit of a process. But I like our chances.”

And Kevin, so do I.

Sincerely,

Andy Gordon

Startup Investor Portfolio