1Mby1M Virtual Accelerator Investor Forum: With Greg Borchardt of Caerus Ventures (Part 3)

Sramana Mitra: What is the go-to market strategy for this company?

Greg Borchardt: There are two sides of the business. They started off in the medical device space. They created a consumer product that we help them down the supply chain to develop the components for the product and ship it over to the US. They initially launched the product in the United States. Initially, they started with online-only.

We felt that it made the most sense to get feedback from the early adapters and be able to iterate from generation one to a generation two product, based on the early feedback we were getting from the heavy users. Then they subsequently launched the product at major retailers in the US including Best Buy and Target as well as a few overseas markets.

Sramana Mitra: They’re seeing good traction?

Greg Borchardt: Yes, we learned that there is a very profitable space in between the consumer market and the medical market. The consumer market can be a very difficult market and somewhat fickle. What we’ve seen is a real convergence between what used to be truly just a medical device and a consumer product.

People are taking more control of their personal health data and there are more ways to collect data from a mass market device and connect that data back into a more robust ecosystem that eventually your doctor can track or may flag the potential for a heart attack. This company in particular is going in between those two markets right now and developing a new product that works with a lot of the sports medicine and physical therapy fields.

Sramana Mitra: Any other example that you want to discuss?

Greg Borchardt: I can focus on a company called Kairos. They’re a local South Florida company. They’re in the computer vision space. This isn’t a pure hardware tech company. I had met the founder four years ago. He was speaking at an event. At that point, the company was into facial recognition solely focused on the HR space.

Instead of a traditional clock-in-clock-out punch card system, this was supposed to prevent fraud. It was going to be through facial recognition. At that point, we didn’t feel that it was ready for true venture investment, but I liked the entrepreneur. He was intelligent and very personable. We kept in touch. It was really over a four-year period that he finally came back to me and said, “We’re ready now.” They built out the technology. They built out the IP.

It was no longer just facial recognition but it was also more of a human analytics platform that combined facial recognition with emotional analysis and crowd demographic analytics technology. This was something that we were interested in, but as he built out the technology, we saw a broader use case ranging from digital signage to autonomous vehicles. We made an investment at that point. They’ve continued to grow the company.

This is somewhat unique. This is the first company in our portfolio that has gone out and done an ICO. We’re supportive of it. It’s a learning process for everyone involved. They just closed down the pre-sale of a $30 million ICO that was 20 times oversubscribed in a matter of weeks.

Sramana Mitra: I don’t understand why this is a good fit for an ICO. What is the token angle of this business?

Greg Borchardt: There are a couple of things. They’re issuing both a security token and utility tokens. The tokens are related to the database of computer vision recognition that the company is building out. As an investor, we’re determining the best pathway forward because we’re preferred shareholders. What does that mean? We have an opportunity to convert into a token that will be traded on a marketplace. There’s the potential chance for liquidity for us.

Very similar to what happens to an IPO, there will be a six month lock up period or we can decide to hold our preferred equity in a company that has raised $30 million. This brings up a lot of interesting issues going forward as to what it means for early stage investors. Thus far, the majority of people raising money in ICOs have been doing it through a white paper. It’s a concept. What starts to happen when you have companies with real revenues that have been around for seven years?

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Greg Borchardt of Caerus Ventures
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