Welcome to the first monthly update of Startup Investor. It’s on the three companies we recommended to new subscribers in December: messaging platform Ansa, cloud-based speech translator SpeechTrans and medical equipment company Medical Surgical Technologies. But I can tell you this right now… All three are progressing nicely and according to plan. The details are below.
Ansa
I’m surprised that co-founder Natalie Bryla had so much to report to me considering she’s been away from the office. You see, Natalie just got hitched. Her honeymoon took her to five countries in the last two weeks.
So the secret is out. Founders do have a life, no thanks to people like me. Natalie had stepped off the plane not a few hours earlier when she took my call. Although she told me she was a little tired, she insisted it was a great time to chat. “I might have been away, but I never really left the office,” she said.
The Countdown to 2.0 Is Just About Over
“So, Natalie,” I asked, “you planning to take off tomorrow?” You know the answer she shot back at me, don’t you?
“No way no how,” she said. “Not during the week when we released the 2.0 version of our messaging application.”
This is indeed big news and a major step forward for the company. Ansa’s new version is faster than the original version, but it’ll be a few days before you can buy it on iTunes. Ansa put the finishing touches on it Friday. Apple still needs a few days to approve it.
New Year Means New Growth Plans
In the meantime, Natalie is busy planning Ansa’s growth strategy for 2014. We’ll get more into the details in the next couple of updates. She wants to focus on targeted social media campaigns. (Can’t wait to hear more, Natalie!)
Ansa’s Snap Judgment of Snapchat’s Hack
I couldn’t resist asking Natalie about Snapchat’s recent hacking problems. She said it couldn’t happen to Ansa. “The technology we use wouldn’t allow a large-scale crunching of numbers to take place,” she said. If you’re unfamiliar with how hackers outed 4.6 million accounts on Snapchat, see this article.
Funding News
More than a dozen Members of The Chairman’s Circle reached out to Ansa. About a tenth of their total funds raised so far – $460,000 – comes from our Members.
Natalie hopes to raise $750,000 or more.
Just Saying or Asking
I had to ask: “Your favorite honeymoon memory, Natalie?”
She said lighting up the lanterns in Chaing Mia, Thailand, was pretty cool. She was also kind enough to send me a picture, which I’d like to share with you…
“It was dangerous business and my hair caught on fire,” Natalie says.
Once again, from us and the Members of The Chairman’s Circle, congrats to Natalie and her husband Patrick on their happy nuptials.
SpeechTrans
Since when is giving something away for free good news (especially when customers used to pay for the product)?
It’s good news when such a “gesture” leads to 300 new paying customers a day.
Let me explain it to you just like co-founders John Frei and Yan Auerbach explained it to me last Friday.
John and Yan reminded me that their communications and messenger app is easy to buy. It’s available via Windows, Android or Apple. You can go to the iTunes store and get one for $5.
Anybody can afford five bucks, right?
Well, not quite. Five dollars isn’t much, but it’s not the same as a freebie.
At $5 a hit, downloads have averaged 100 a day. But before SpeechTrans charged for its app, it was available for free on a trial basis only. During this period downloads averaged 6,000 per day.
Quite a difference, I’d say.
So from free to charging a small fee, SpeechTrans is once again reverting to selling it gratis. Why?
SpeechTrans has a brilliant plan up its sleeve.
A Brilliant Plan
Based on some tests it has done, John and Yan figure that they will be able to convert about 5% or 300 of the free users to a paid basis. For free you get 20 translations a day. If you pay just $2 a month, you get double that amount. For $5 a month, you get 75 translations a day.
That’s 9,000 newly paid users a month paying at least $2 a month. Annually that’s a minimum of $200k in new revenue. But since some subscribers will be upgrading by more than $2 a month, revenue should reach several hundred thousand in the first year. And the numbers should quickly transition into the millions in the out-years as current users upgrade to more expensive services.
A Huge Deal Looms in Africa
John and Yan are gearing up to meet the translation needs of 250 million Internet, smartphone and telephone users in West Africa through South African company MTN Global. The giant telecom serves 22 countries, including Nigeria and South Africa.
The math is compelling, Yan told me. “We expect at the very minimum that 0.1% of MTN’s 250 million subscribers will sign up for SpeechTrans’s translation services. We should make at least $15 million in the first year.”
The new initiative will be ramping up shortly. Since it didn’t start at the very beginning of the year, some of the $15 million will leak into next year’s numbers.
In Other News…
- SpeechTrans will be launching a hearing-impaired initiative later this week with one its partners, Microsoft (Nasdaq: MSFT). Tens of millions of hard-of-hearing people worldwide cannot make a phone call by themselves because of their hearing problems. SpeechTrans speech recognition technology will enable these people to see what the person on the other end of the line is saying… in 44 languages, by the way. My hat is off to both SpeechTrans and Microsoft for taking the time and effort to address this problem.
- The latest language added to the company’s dozens of languages: Hebrew. Remember this about SpeechTrans: Before it includes a language in its translation services, it must be 80% to 85% accurate.
- Next language? Hindi. Almost 300 million people speak Hindi. It’s the fourth most-spoken language in the world behind Mandarin, Spanish and English.
- SpeechTrans will be presenting at a special online demo day event sponsored by one of our favorite portals, RockThePost, on January 21.
Funding News
SpeechTrans has raised a six-figure amount from Chairman’s Circle Members so far. And it expects to raise more over the next week or two. Here is the investment-pipeline link, just in case you’re interested in investing.
Just Saying or Asking
John and Yan are coming to Baltimore! After dozens of phone conversations, we decided it’s time we met. We’ll be exchanging ideas in a series of meetings at the offices of The Oxford Club on January 24. I’ll let you know how they go.
Medical Surgical Technologies (MST)
MST has just wrapped up its Series B fundraising campaign. It had set out to raise $7 million from investors in the United States, Israel and a few other countries.
“We had a successful fundraise. I just saw MST’s CEO, Motti Frimer, last week in Los Angeles. With the company’s fresh infusion of funds, he’s raring to go,” Jon from OurCrowd told me yesterday.
Just to refresh your memory…
OurCrowd is a combination portal and venture capital outfit. Like many VCs, it selects one of its investors to join the startup it has helped fund. It’s not about being privy to inside information. It’s done to give the startup the benefit of another expert’s experience. Although David couldn’t say for sure who it will be, he told me that, as always, they’ll select a “strategic mentor” based on his or her ability to help the company grow.
Jon told me he’ll have more information to share when MST issues its next quarterly report. I’ll be sure to send you a great deal more substantive information on MST’s progress at that point.
Just Saying or Asking
“Anything else on your mind?” I asked Jon.
“I just want to thank Startup Investor and the Members of The Chairman’s Circle for their investments. We enjoyed working with them. Our exclusive with Andy and Startup Investor was a huge success. The next time we have an extraordinary company we’re investing in, we’d like to do this again.”
It’s a deal, Jon. I like the idea of OurCrowd serving as our eyes and ears in Israel, a country fully deserving of its nickname “startup nation.”
The vast majority of our companies will be coming from the United States. But global diversification is something I’ll continue to pursue.
I strongly suspect Israel will be contributing more than one startup to our portfolio.
So, back at you, Jon. We appreciate our friends at OurCrowd. To paraphrase a certain Rick Blaine as he bid a hopeful farewell to his friend and adversary, Captain Renault, in the movie Casablanca, “Audrey, Jon and Zack, I think this is the beginning of a beautiful friendship.”
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