The fantastic 5 from Target’s third accelerator batch
Starting as just an idea in the Fall of 2013, the Target Accelerator programme has come a long way. With 10 startups already having graduated the programme, the accelerator is all set to unmask the ‘Fantastic 5’, who participated in the programme over the last 16 weeks, this Thursday.
Navneet Kapoor, President and Managing Director, Target India, took time out to explain the accelerator programme to us.
Speaking about what inspired the programme, he says, “Retail is getting increasingly transformed and disrupted. The last decade has only been about proliferation of data and technology. Thus, we started seeking out new DNA, and started looking not just internally, but externally.”
The intent is simple, he adds, “Not only do we want to accelerate the journey of the startups we are selecting, but we also want to help them build their idea, and if feasible, integrate them.”
According to Navneet, times are changing fast:
“Our accelerator’s focus is constantly evolving. When we started, we were looking at e-commerce capabilities, but now our focus has evolved to omni-channel. The quality has definitely improved, and so have our experience and capabilities to curate them. We believe that great ideas and learnings can come from anywhere."
He gives the example of Konotor, which was a part of the first batch of the accelerator programme. Their in-app two-way communication was implemented at Target stores in the US. This helped while communicating with the ground team at various stores.
But what distinguishes a startup, and makes it the cream of the crop, is the solution it offers, says Maheshwaran Calavai, Director- Target Accelerator Programme.
“It is essential to see what learnings we can get from a certain startup. We get almost 200-300 applications for each batch. We speak to each of them multiple times, going to and fro to understand how their solution can fit in with Target’s current priorities,” says Mahesh.
So what steps are taken to nurture the startups?
Mahesh says that Target’s focus is on creating a value proposition for these startups by giving them a real business problem to handle. At the end of four months, they are actually asked to implement their solutions on real customers and in real scenarios. That is where the differentiation lies compared to other accelerator programmes.
“We see a lot of potential in the startups we choose to accelerate; however, we think they are not really thinking about the real problem. That’s where our expertise of being present in the US comes into play. We tell startups that you’re thinking and working of A, it could be A++” adds Mahesh.
The other key values rendered by the acceleration include:
- Retail mentorship: Target’s retail experience comes into play. The startups work with several merchants and marketers. This gives them the right exposure to approach specific problems with different nuances.
- Expanding operations: The Target Accelerator Programme helps startups push operations by not just providing the right resources for building their technology, but also by helping them hire the right talent, build the right team, while assisting them with their pricing and revenue models, and with incorporations with the US.
- Investment: The selected startups are funded by the accelerator, not as a one-time proposition, but a series of investments. While not divulging the amount of investment made, Mahesh says that it is not the primary focus of the Accelerator. However, while launching their first batch in February, the company said that it will be helping startups with USD $30,000. Moreover, Mahesh doesn’t disagree that they pick up equity from companies they accelerate.
From the get go, teams have access to Target’s business teams in India, ready with mentors and business partners to guide them throughout the programme. Moreover, the business partners are senior global leaders who are the decision makers for their vertical at Target.
How does it help Target?
For Target, this engagement helps in a number of ways. Mahesh says:
“Not only does it give Target the opportunity to take a crack at solving real challenges through innovative retail technologies that can disrupt the segment, it also helps us build innovative products that we can leverage by being the startups’ customers to provide value to our (Target’s) customers.”
Moreover, Mahesh says that Target is open to opportunities for acquisitions, mergers or partnerships with the companies.
But which companies caught Target’s attention this year?
Find me a Shoe
Find me a Shoe is a virtual fitting room for shoes. It helps customers find the right footwear via virtual shopping. What one needs to do is take a picture of your feet from three different angles, and every time you go online shopping for a shoe, it will tell you how the shoe will fit.
In the next two years, the startup plans to hold a database of 10 million foot profiles and 100,000 shoe profiles. They are looking forward to launching the beta version of the app by end-January 2016. The company has already started working with small retailers in the US and has closed a round of Pre Series A. Shabari Raje, co-founder and CPO says that their product went through four re-iterations during the 16 weeks of the programme and was tested with real customers who responded positively to the product.
Bug Clipper reports bugs and shares feedback through screenshots and screen recordings. It has developed a Web-based testing product and is pivoting to an enterprise solution. According to the co-founder Puneet Sharma, when testers and developers don’t speak the same language, it takes multiple rounds of communication to spot a problem and fix it.
Moreover, this problem is compounded when working with a remote team. Bug Clipper captures screenshots to avoid time wasted in for spotting a problem and allows individuals to record a video by shaking the device.
The solution was well received by Target, when the time taken to fix a bug dropped from eight minutes to a mere minute. Moving forward, the venture is pivoting towards a strict enterprise focus and is already in engagement with BFSI clients like ICICI, Kotak, and Yes Bank, as well as others like Reliance and Tata Motors. The venture is also looking to raise seed capital of USD 500,000.
House of Blue Beans
House of Blue Beans provides best-in class 3D product visualisations. In the last 16 weeks at Target, they have built a tool that enables computer generated images (in less than 30 minutes) as an alternate to photography.
Being in the industry for the last four years, their team comprises computer graphic artists and 3D programmers. With a focus on Home Décor, they are saving customers from warehousing furniture for photographs and manual conceptualisation.
Their revenue model is different for different markets. In the US, since the cost of hiring a photographer is high, they will charge their customers 15-20 per cent of the cost saved for hiring talent. In India, they are working with a lease model, where they charge their clients for every image.
In the long run, they also plan to launch their B2C portal ‘Furnitup’, which might be a marketplace for marketplaces. For example, one can have real estate aggregators, furniture aggregators and general hardware equipment sellers (paint etc.) help you design the look of your house before you buy it.
The firm is currently working with Urban Ladder and claim that by January 2016, 80 per cent of the product on the furniture marketplace will be done by House of Blue Bean’s 3D technology.
Time Flex provides cloud-based monitoring for micro environments. During their stay at the Accelerator, the team developed their product into an energy-efficient sensor for key parameters in retail stores.
There is a sensor network which monitors the temperature, sound pressure, freshness of air etc. in the environment . All one has to do is peel a sticker and place the sensor at the location that needs to be monitored, thereby avoiding the hassle of heavy wiring.
The company has taken quite an innovative approach to their business model and are selling it as a service with a flat monthly charge of USD 5.95 per sensor placed. The monthly charges include a timely gateway device, GPRS communication, personalised cloud server and an iOS or Android app.
The venture is looking for funding and aims to work with clients in the retail, healthcare and hospitality sectors. The hospitality sector will obviously have a click model, where hotels pay only if the room is occupied.
Discover Dollar is a technology that stops leakages and overpayments. It detects and resolves overpayments and revenue leakages like pricing errors, unclaimed allowances and rebates by analysing various data sources.
These leakages could be because of promotions, special offers/ pricing, etc. The co-founder claims that the startup was awarded by SAP and TiE for its prototype in 2014. They recently closed a round of seed funding from Technology Business Incubators and are in active negotiations with six out of the top 10 retailers in India.
Target is definitely high on spotting the potential that lies in India. According to Mahesh, India is the second headquarters for the retail giant and the contribution of India can be seen in almost every innovation Target rolls out globally.
Out of their previous batches, Whodat Spaces continues to offer virtual reality guest experiences and Visarity continues to assist the behemoth with digital marketing solutions.
This is just a large form investment Target is making, where in the future, we might see a slew of engagements, investments and acquisitions from the Accelerator.