What Startup Funding Crisis? Not For Location Tech Companies
New fundings in the past month from beacon platforms Rover and Unacast, future of retail company eyeQ, and native location ad company Blis suggests that not all startups are struggling.
Despite the the doom and gloom being presented in the general tech press about startups’ increasing difficulty in attracting venture capital, the location space continues to be a hot investment.
Over the course of the last week alone, three location tech startups have closed funding rounds: Canadian beacon content and geofencing provider Rover, retail tech platform eyeQ, and Norwegian proximity network and Proxbook backer Unacast (which raised $5 million, Street Fight reported). And last month, UK location-based native ad specialist Blis Media raised a whopping $25 million for its global expansion efforts.
For Rover, which has netted a $1.1 million seed-financing round that includes contributions from BDC Venture Capital, 500 Startups, and several high-profile angels, the need to upgrade its platform to meet the wider demands of beacon technology is the reason for the raise.
Meeting The Demand Of Proximity Marketing
“With 85 percent of the top 100 US retailers projected to have beacons by year’s end, and beacon marketing expected to directly influence $44B in retail sales, the market potential is immense and VCs are investing after seeing the value in ‘location,’” says Rover CEO and co-founder John Coombs.
“Location-powered engagement is the single biggest trend taking shape in mobile right now and Rover is at the forefront of this market,” said Stuart Wheldon, partner with investment firm Wheldon Brothers Ltd. and former vice president at Eloqua Inc. Weldon, along with Ryan Craver, CEO of Trimfit and SVP of Lamour Group, and Statler Consulting’s Stephen Statler, has also been named to Rover’s advisory board. “Rover has a strong ‘location-first’ vision combined with advanced technology and a great team. They are well positioned to lead this space.”
In terms of Rover’s funding, Coombs plans to use the seed funding to “hire for growth” at its offices in Toronto and San Francisco. Rover is also working on launching a number of major updates to the platform in the coming months.
“We’ve learned a lot about the space over the past few years working with customers and better understanding the location opportunity so we’ll be investing heavily in product as well,” said Coombs, who’s company has provided beacon engagement programs for Procter & Gamble and several National Hockey League and National Basketball League teams.
“Rover is determined to quash the belief that beacons only drive coupons,” said Craver. “Rover understands that beacons, sensors and location all have the ability to teach, personalize, engage and provide utility use for the customer. If promotions come as part of that, it’s icing on the cake.
“The entire platform is setup to allow small and medium size businesses up to large corps a program in a box. The program includes hardware, software, analytics and campaign development. Simple, easy and scalable across many industries from sporting to retail to public service.”
What’s been most impressive about Rover is its work on sporting venue engagements, Craver added.
“Second screening when watching TV and sports has become second nature,” he added. “To be able to watch a live sporting event while answering trivia related to game, gamify stats and order a beer to your seat…can it get any better? This is modern day live event viewing.”
The Future Of Retail
Austin’s eyeQ, which bills its services as offering to “personalize the in-store experience,” raised a $3.5 million first round funding led by Align Capital and previous backers.
Four-year-old EyeQ, which has worked with brands such as Ford, HP, IBM, Intel, and Samsung, will use the funding to promote additional technology development while building up sales and marketing.
“We are thrilled with an additional financial infusion to help us accelerate our business,” said eyeQ founder and CEO Michael Garel, in a statement. “More resources will enable us to continue serving the growing needs of our current customer base who want to expand their use of eyeQ technologies. This investment will also help us to more quickly add new retailers and brands who are using eyeQ to reinvent the in-store shopping experience.”
The company uses IBM BlueMix and IBM Watson to personalize the in-store shopping experience with custom, interactive in-store digital displays. EyeQ’s “shopper-aware” digital displays typically ask customers a quick survey about their interests to devise suggestions that can promote shopping and sharing their info via social media channels.
For example, at its showcase during this past SxSW, eyeQ created a display for liquor stores and bars that would suggest cocktails and spirits based on a person’s age, gender, location, frequency of visit, and even their present emotional state to deliver increased loyalty to the store and its brands.
“What eyeQ is doing for the in-store shopper experience is giving brick-and-mortar retailers a way to stay ahead of the game against online competitors,” said Lisa Harris, managing partner of Align Capital, and a new eyeQ board member. “In addition to Michael Garel and his management team, the response to the technology by end consumer shoppers as well major brands such as Ford, HP, IBM, Intel, Samsung and OtterBox is what solidified our interest in investing.”
The Power Of Location
As we reach 2016’s mid-way point, it’s worth taking a quick look back at how the year started and how fears of a weakening economy and anemic retail environment made it appear as if even the location space might cool down, as beacons and other proximity tools have only barely begun to enter the mainstream.
Amid sell-offs with the Dow Jones Industrial Average plummeting 391 points, location-based marketing providers cashed in a collective $100 million in venture capital money, including: beacon platform Estimote, which raised $10.7 million in a first round funding; place-based discovery app developer Foursquare ($45 million), location analytics platform Euclid ($20 million), and geo-data PlaceIQ ($25 million).
This past weekend, the NYTimes joined the chorus of concern about tech, noting that venture capitalists had been growing more demanding — and less generous — with tech companies than in the recent past, citing the National Venture Capital Association’s estimate that funding fell 11 percent to $12.1 billion in the first quarter from Q1 2015.
At least anecdotally, that doesn’t seem to be the case for location tech, which has seen the profile of beacons, geofencing, and related proximity marketing programs attract more attention from major brands looking to enhance and expand their respective omnichannel strategies.
Location oriented companies are seeing funding come their way for a few reasons, said Anne Marie Stephen, CEO/founder of future of retail consultancy Kwolia. For one thing, location tech is getting more visibility as more companies incorporate location services into their apps and overall data collection.
And at a time when “data driven marketing” is the air all companies breathe, the insights that location can provide about consumer habits, both in real-time and in terms of long-term shopping patterns, have proven essential to businesses across retail, food services, healthcare, transportation, and entertainment.
“The data is invaluable for measuring true consumer behavior and providing context for other data sets,” Stephen said. “Behavioral data that is collected from the ways people are moving through their individual worlds, provides the foundation for precise measurement and engagement. We can measure where consumers go, how long they stay, their path or trajectory between locations. That allows brands the ability to understand true behavior, infer intent, measure influence, measure engagement — and even predict location performance. Recently, Foursquare successfully predicted a 30 percent drop in first quarter sales for Chipotle based on location data. That’s the power of location.”