It seems like a long time since the inaugural Startmate start-ups were unveiled last year, but, already, the second generation are snapping at their heels.
The seed accelerator program, which offers mentoring and $25,000 in funding in return for a 7.5% stake, recently unveiled the eight start-ups that it will hot house in Sydney for the next three months ahead of an investor meet-and-greet in the US.
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With all five participants from the class of 2011 gaining funding, with one even being purchased by Wal-Mart, hopes are high for this year’s intake.
So, which start-ups have made the grade? Over the next two days, we will profile all eight. Here, we speak to the first four.
What? A cheap airfare locator where a team of experts are paid to find the best deal for users.
Founders? Lauren McLeod and Todd Sullivan.
So, what’s the story behind Flightfox?
We both travel around a lot and we realised that there was a better solution to the way we book flights. Prior to this, we were living in Germany and had just sold our start-up Globetrooper.com.
We thought that there could be a crowdsourced solution to finding the best, cheapest flights, rather than trawl through lots of different sites.
Prior to this, we were living in Germany and had just sold our start-up Globetrooper.com.
With Flightfox, if you want to book a flight, you go to the site and enter your trip details. This creates a contest between a crowd of experts who submit their best flight options to you.
You decide which is your favourite idea and the experts are motivated by a finder’s fee.
What’s the pricing model?
It costs $30 to use the service. At the moment, we are trying a different models for the finder’s fee, such as 10% of a certain price saving.
We are targeting international and long haul flights, so $30 on top of that isn’t much.
We started to realise that we needed the benefit of being around other start-ups. It’s surprising how much you can achieve with that kind of help – we’ve managed to code, launch and get customers already. We’ve saved people around $50,000 already. That would’ve taken many months without Startmate.
We applied to the program a few weeks before the internets and actually launched the site after the first interview.
That sounds pretty stressful
Well, yes, we were in a bit of a pickle because we had to launch on the interview day, as well as move from Germany.
We saw the opportunity in Startmate so we came back to Australia. There was a real sense of urgency that we still have now as we have three months until we pitch to international investors.
How was the Startmate process for you?
The application form was quite detailed and we had to be completely committed. The interviews took between eight to 10 hours, testing all our assumptions about the business and whether we were being too optimistic.
We were thinking non-stop about the idea. We were falling asleep at 7pm each night.
Mick Liubinskas gave a one hour speech about focus and why it’s important to not add too many features to your start-up. It’s better to prove the core concept before complicating it.
As our site is global, Mick told us to not worry about offering multiple currency options and to just prove the concept first. That was great advice.
How do you hope to attract users away from the likes of Webjet to Flightfox?
We always knew that flight search was broken. It could take you hours to do. Webjet doesn’t cover most of the budget flights in the world.
Also, a lot of sites only show fares from airlines that they get commission from. We search from every source.
The other thing is that there are humans searching for flights, rather than machines. If a guy wants to fly with three cats or advice where to park his car, a human can answer that. You can’t get that from Webjet or Expedia.
What are your goals for the business?
The three months feels like a deadline, so everything is very fast-paced. We’re looking to get the advice from a maximum of five mentors at Startmate – the mentorship is much more important than the money.
We’re incorporating the business in the US and we will need funding to scale it, as there’s a low transaction amount per customer.
We just need to prove the concept and go from there. Once we explain it to people, it is de-mystified.
What would your advice be to other start-ups that pitch for programs such as Startmate?
Have a clear problem that you’re solving, a clear business model and get proof of concept. Keep it simple. Don’t over-complicate it.
What? A flexible invoice system that sends automatic reminders to debtors.
Founders? Chris Hexton and James Lamont.
What gave you the idea for Invc.me?
We ran a web development company together and we were asked to build a product that allowed a business to invoice its customers.
We wanted to do something that was stylish and superior to with what else is out there. We started work on it about four months ago.
The customer said that they liked it and we thought we could make a product from it. We thought it was worthwhile to apply and focus our energy on this. We’ve stepped away from the web development business to do this.
How does it work, exactly?
It’s a useful tool for accounts receivable. We found that Xero and some others were a bit clunky and there was no way to send reminders and track invoices.
Also, a lot of the other systems don’t allow PayPal payments, which can be a bit inconvenient. We built something that can track payments more easily and can send automatic reminders.
You should be able to send an invoice, set the due date and the system does the rest.
Why apply to Startmate?
It’s well organised and it’s easy to apply online. There are a lot of incubators out there, but Startmate has been around for a year and the mentors are exceptional.
On top of that, you’re giving away a relatively small amount of equity in return for that help. We had a single interview day and, regardless of whether we got into Startmate or not, it was useful for the help and advice we were given.
What points of difference does your start-up have to the other invoice systems out there?
Most other products out there focus on the generation of invoices. We want to make it easier to chase debtors.
A lot of sole traders and businesses with fewer than five people use desktop publishing for their invoices and they need help to track the payments.
What stage are you at now?
The product is ready to sign up to and we are getting feedback from customers on what they need and how we can help them.
As for the price point, we haven’t really decided. It could well be $15 a month or maybe with a higher tier or two.
It seems like a good time for a start-up like ours. There’s a good market out there for us. We want as many customers as possible and plan to build the business as quickly as we can.
What is the greatest challenge you face during the Startmate program?
Three months is a short period of time and it’s already flying past. The biggest challenge will be iterate the business in that time and ensure that customers are happy with the product.