In New York’s Times Square, in the studios of NASDAQ, entrepreneurs and those that champion them exploded with glee as the trading index shut down for the evening on October 14. No, it’s not a young company celebrating its IPO, it’s a new company hoping it has a future.
It’s the culmination of the 15th consecutive year of the Rice University Business Plan Competition handing out kudos – and cash – to a handful of promising, fledgling companies hatched by graduate students. This year the top spot went to Utah-based tech firm, KiLife Tech—a company offering a wearable activity tracker that claims to help parents keep tabs on their small children.
Over the years Rice’s Competition has seen over 500 business plan ideas compete for cash and 169 of those are still in operation today, or have successfully exited either by company sale or IPO. According to Rice, those firms have attracted $1.2 billion in investor capital. Some success stories include 2011 competitor, Scan, from BYU, which sold to Snapchat for $54 million in December 2014. A 2007 competitor, Lumedyne was reportedly sold to Google for $85 million.
The founders of KiLife, and members of the Rice University Alliance for Technology and... [+]
This year saw over 700 companies initially apply to compete, boiled down to 42 for the final rounds of competition, in which the new entrepreneurs got face time with some 275 judges in a handful of industry categories. The firms were competing for over $1.2 million in capital donated by sponsors like Owl Investment Group and the GOOSE Society of Texas—a collection of angel investors. Though all 42 companies received some funding, KiLife received $620,000. The investors will be receiving equity in each firm, though how much is decided by individual negotiations.
Managing director of the Rice Alliance for Technology and Entrepreneurship, Brad Burke, pegs KiLife’s success on the level of development it had achieved, having built a prototype and begun conversations with potential retailers and customers. That KiLife is also catering to a very appealing need the world over – with a potentially huge market – was also in the company’s favor, he said. “Anyone who has been a parent of young children is very aware of the need to keep track of their children in crowds and in playground situations.”
The KiLife team celebrated its star status – as have all other Rice competition winners of the past eight years – by ringing the closing bell at NASDAQ in New York’s Times Square. The company’s key product – an activity band, worn by toddlers, that notifies parents where their children are and emits a noise when the child has wandered beyond a set perimeter – was inspired by CEO Spencer Behrend’s son, who one day wandered off in a crowded area, giving his mom and dad a fright.
The company launched a year ago, but prior to that, Behrend – earning his MBA from BYU – and co-founders Jeffrey Hall and Zack Oates (their real names), spent six months trying to understand their market. “We began observing parents,” says Behrend. “We got heavy into observation and research and surveys and focus groups. We started talking to parents about if there was a device like this, a technology that could help you track and monitor your child, how would it fit into your life?”
What they learned was that parents wanted to allow their kids to explore freely, yet be able to keep track of them. Connecting with cofounder Jordan Baczuk, a real-time radio signal processing student at the University of Utah, the team developed a prototype. About 200 beta-testers bought the device during KiLife’s January Indiegogo campaign that raised $25,000, and testing has been ongoing since July.
It’s also early days in the market, says Behrend, who says that only about 30,000 child-focused activity tracker bands have been sold in the past year. “We’ve reached a critical mass of young parents who grew up with the internet, are tech savvy, who don’t give a second thought to adopting this kind of technology into their parenting.”
This kind of thing has been tried before, KiLife admits, but it’s only through the advent of Bluetooth Low-Energy and Apple’s iBeacon area network technology in smartphones that it became plausible to gauge distance between devices accurately and in a battery-friendly manner.
The competition, says Behrend, includes My Buddy Tag. The Kiband is different because it can emit sound to notify parents where their child is—saving them the moments required to interact with the accompanying smartphone app. The sound can also act as a warning to the child and the app can tell parents which direction the child is headed, within its 200 feet radius. The Kiband also emits a sound – and the smartphone app notifies parents – if a child goes beyond the device’s maximum radius.
So far manufacturing is being set up in Denver, Colorado, and much of the $620,000 cash injection from Rice will go towards working capital to bulk up on inventory, the rest will be spent on R&D. The first shipments should arrive in spring of 2016 and, so far, over 4,000 customers have requested to be notified when the Kiband becomes available. Other customers are also being opened, says Behrend. “We have had discussions with Babies ‘R’ Us, and with Amazon.”
On the horizon, granted the product catches on, the team has plans to open up the platform to developers so that the Kiband might become a platform on which other companies might create wearable tech products. Says Behrends: “We intend to open the API at some point in the future to allow people to develop anything they can imagine on a really smart child device.”
