“The U.S. itself was a start-up”: Notes from Venture Atlanta 2012

Elizabeth McQuerry

October 30, 2012

Young Atlanta-area businesses with big ideas and the venture capitalists that seek those big ideas gathered in Atlanta in October 17 and 18 to showcase the start-ups and share experiences from alumni. My focus in attending the conference was to see which of the start-ups featured payments angles and how this important aspect was being treated. My takeaways from the conference were much broader in scope. But first things first – payments.

Surprisingly (to me), only a handful of the 40 early stage and venture spotlight companies that were featured had a payments angle. This was surprising given the deep knowledge in this region emanating from the industry giants like First Data, Fiserv, Global Payments, and TSYS. Instead, many of the nascent companies are focusing on software as a service (SaaS), “big data” analytics, marketing support, and industry-specific software solutions.

Even more notable was the fact that for some of the companies that did have a payments component, payments was, for them, the least worrisome aspect of their business. This is due to the fact that these businesses are relying on and utilizing the successes of the previous generation of start-ups like PayPal and Shopify. The current generation doesn’t have to worry about payments – it’s all taken care of (well almost).

This was the case for eCommHub, an inventory management system for drop-shippers. To manage payments for its clients, eCommHub simply integrates with provider solutions like Shopify and 3dshop which both facilitate the end-to-end e-Commerce solution for on-line sellers. CollectorDASH, another local start-up that provides a targeted eBay-like solution for specific communities (currently for aficionados of model trains and action figures) in the “collectible ecosystem”, has an API connection with PayPal to manage payments between buyers and sellers in the collector market. Micropayments, or more specifically a pricing scenario that better aligns with the small-dollar sales of many collectibles, are a need that CollectorDash will be looking to fill in the future.

Two more established companies caught my attention because payments are at the heart of what they do. Even as they are very different, both focus on making payments more secure. The first one, Acculynk, offers a software solution to make PIN debit secure for use on-line. This is accomplished via a graphical interface on the computer screen that allows the cardholder to click the PIN digits on the screen. In between each number, the interface scrambles the numbers so that attempts to capture the numbers by fraudsters will not yield positive results. A separate solution is available for mobile e-Commerce.

Acculynk is trying to solve a problem that still exists in the payments space – how to securely allow debit card users to engage in on-line shopping using their PINs. There definitely is a segment of consumers who prefer the PIN option.  Before the Durbin Amendment equalized the interchange costs of signature and PIN debit transactions in the United States (for regulated debit), online merchants also preferred the lower cost PIN option, but were prohibited from offering it by PIN debit network rules.

There is a growing plurality of debit card users in the United States – including both people who do not have a credit card and people who simply prefer debit. This is even more true in emerging markets where pre-paid dominates the consumer electronic payment market. It will thus come as no surprise that Acculynk has set its sights on integrating with payment networks in Latin America and Asia Pacific (yes, I managed to find the link to international here) where large swaths of the population currently do not have the ability to make a purchase on the internet because they don’t have access to the secured lines of credit that credit cards offer.

The other company I noted was Pindrop Security, another authentication service but with a focus on fighting phone-based fraud. Pindrop deploys location analytics, acoustic “finger printing” and other analytics to provide a holistic solution that uses your phone call to authenticate you. This technique, if successful, would turn the call center or help desk into a reasonably secure proposition over the weakest link that it can be today. The banking industry sorely needs solutions like these.

Both Acculynk and Pindrop Security appeal to me because they seek to solve real-world problems that deter the payment system from being more reliable and robust than it already is. Of course, the real world applications for Pindrop Security are broader than payments and include government security needs and any other provider that needs to authenticate its callers. Acculynk, on the other hand, addresses only payments but has tremendous market potential given the current void in bringing PIN debit users onto the internet.

Venture Atlanta was also interesting for the insight it provided into the world of start-ups. This was also the first event I have attended with this focus but I thought the Venture Atlanta process was well conceived as the featured companies receive coaching from local entrepreneurs, venture capitalists, and other service providers (ex. marketing, legal) before the event. Even so, the uniqueness of each business proposition and its spokesperson does emerge in the six minutes allotted per presentation.

One start-up in particular stood out for the focus, style, and brevity of its presentation. Admittedly, I’m probably too old to be in the target market for Synkup, a scheduling app that lets you invite, discuss details, go back and forth on the timing and activities, as well as automatically place the event on your preferred calendar software right on your mobile. Even so, the dynamic but succinct presentation by Taryn Crouthers’, synkup’s founder and CEO, communicated tremendous information about what synkup is all about.  To get a sense of what I mean, check out the product demo on YouTube or this lesser quality though dynamic video of the presentation at Venture Atlanta.

The presentation was minimalist in terms of text but communicated with tone and images. David Cummings of Pardot, one of the successful Venture Atlanta alumni who spoke at the event, noted that a slide should have no more than 100 characters per page. Surely we live in a visual world. At the same time, if you can’t get your message across quickly and easily, you probably don’t know what your business is exactly. (Note to self for future presentations.) Cummings, the CEO of Pardot, speaks from experience. In only five years, he and others built Pardot, a marketing automation firm, into a successful software venture by selling to customers and generating revenue – all without the support of venture capital. In September, Pardot was acquired for a reported $100 million.

Other words of wisdom were shared at the conference by keynote speaker Steve Case. Now a venture capitalist himself, Case was of course the co-founder of AOL and today leads Revolution, a company that invests in technology-driven firms with a vision to disrupt existing paradigms. Case also heavily focuses on the role of the company leadership – the entrepreneur(s) when identifying strong candidates. Case noted that it’s all about “people, passion, and perseverance”. He also argued that start-ups were leading job creators today.

I’m not sure if Case meant to imply that the currently high unemployment rate could be significantly mitigated by start-up ventures but his larger point is interesting to ponder. “The U.S. itself was a start-up two hundred years ago” and we need to maintain “entrepreneurship” as it is the force that has gotten the country to where it is today.

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