Charles Cormier hosts six VCs evaluating four founders. Chris pitches Common Layer, an AI safety overlay with $1.2M ARR. Chris McKenna presents Ironsight, ballistic eyewear for military and law enforcement with a $2B market. Anisha Bhandari showcases Checkout.ai, an AI sales agent for e-commerce with $500k ARR. Darryl Young pitches Karmek, a stock-gifting platform that took 30 months to get FINRA approval.
Chapters
Welcome to the 11th edition of Spark Tank. Today we have 4 promising founders and more VCs. We have 6 VCs today, which is pretty rare. So quite exciting to make the addition today. Each founder is gonna have 3 minutes pitch, and the investors are gonna have about 2 minutes to ask them questions or give them feedback on their decks. So I'm glad to have my friend Chris, on today. Chris, maybe you can start with a quick round of intro.
Yeah, hi, my name's Chris, calling you from Australia. I'm the founder and CEO of Common Layer, which I'll explain in my pitch.
Chris McKenna.
Chris McKenna, I am the founder and CEO of Tardigrade Industries, making protective eyewear.
Anisha. Hi, my name is Anisha Bhandari. I'm the co-founder and CEO of Checkout.ai. We're an agentic commerce platform.
And then maybe we can go with Konrad because he's on the founder side. Quick intro about yourself, dude.
Hey, hi everybody, I'm Konrad. I'm from Ugura Bionics and we're doing speech assist devices for people who can't speak.
There you go. On the VC side, John Cormier.
Hey, Charles?
Yes. I could not hear Anisha or Konrad. I don't know if others could.
Yeah, I could hear them, but quick intro about you, John.
John Frankel, founder of FF Venture Capital. We've been around 18 years, early-stage startup focus, office in New York and in Warsaw.
Lance, quick intro about yourself.
Sure, lapsed astrophysicist, past founder, founder of anonymizer.com and now president of the North Bay Angels.
Matt, quick— In the past— introduction about yourself?
Yeah, uh, Matt Blumberg. I am a CEO of Markup AI and author of Startup CEO, Startup CXO, and Startup Boards.
Shane?
Shane Wilson, Citicapital. We're an early-stage VC fund, uh, focused on what I call— I say we're nerdy generalists. So we go deep tech, robotics, B2B AI. Excited to be here. Good to see you again, Charles.
Sunny, a quick intro about yourself.
Yes, Sunny Ray, co-founder of Raz Rocket, along with SparkTank. I'm Charles's co-founder, happy to be here.
Darryl, I forgot you, a quick intro about yourself.
Darryl Young, founder at Carmack. We help families build wealth through stocks as gifts.
There you go. So let's start with the first pitch. Let's have Chris on stage here. Chris, you're gonna go without a deck today, so eager to hear this.
Okay, well, thank you everyone for your time. So I'm calling in at 6 AM here in Australia. A bit of background, I'm an Aussie veteran. I'm a former startup founder. I've been building health tech for 10 years. And the reason I've decided to actually just talk today rather than actually showing you a deck is because it's much easier conversation. I'm sure you see a lot of decks. So I founded Common Layer after seeing the emergence and the rapid adoption of conversational AI over the last 3 years. And have really just started to see the damage this is causing generalist platforms that are being used for mental health purposes and existential inquiry that were essential. ChatGPT was designed to be Google on steroids, to be able to answer your questions and be there for you in a dynamic way. But as Harvard Business Review confirmed for the second year in a row, the top 3 use cases are existential inquiry. And without all the safeguards that we need to keep people safe when they display dangerous behaviors, these platforms are causing death and a lot of suffering, everything from mania to depression and risk to others as well too. So over the last 2 years, we've built 2 MVPs. One was a consumer-facing wrapper around Claude, which was the first generation of Common Layer. Common Layer is using 34 proprietary regulatory and compliance and governance frameworks that we pulled together from all the emerging laws around the world. We tested it for 6 months with 1,500 users and we validated 7 of those our core frameworks, and we found we could keep people safer than the LLMs can do themselves. So we're currently building that now. So we're going to have a layer that is fully clinically informed from day one. It's very defensible. We've already started the patent process, and we'll move towards having an app live in market early next year and apply for FDA software as a medical device approval. So far, the market feedback's been amazing as potential SaaS product to take into the EAP market, which is worth about $250 billion in the United States, in Australia, and the UK alone. We've got letters of intent underway with the Queensland Police Service, with Zurich Insurance, and with Banistar Insurance, who's a former investor in my last business. The feedback has been amazing from consumers in the sense that a couple of things that we've done that ChatGPT and Claude are yet to do is create what's called relational distance between users and platforms so that at no given time do we have issues like relational drift, where you might use it for one purpose and it starts to manipulate you with sycophancy and hallucination. And the other thing that we've done really intentionally is make sure that we don't just give people answers, we guide them towards their own answers. And the feedback has been astounding that people are actually finding they're getting empowered rather than becoming dependent.
Mm-hmm.
And we don't have that anthropomorphic seduction you tend to see with these platforms. So risk is what we're trying to let companies outsource to us. So we want to protect end users and we want to protect the organizations that want to deploy conversational agents into their workforce to support their employees' wellbeing through EAP platforms. We've spoken to 3 large EAP vendors. They're very interested in seeing the prototype and working on pilots. And I've got 7 seconds to go. So thank you all so much for your time. I hope that wasn't too boring.
No, it's great.
Ah, it was good. I still would have loved to see slides. I would have started with your background, Chris, right? Because you have such a striking background as a veteran and then your PhD, you're making like a full thesis under this. And then I would have pulled the sycophancy probably a quick, a bit more quicker, right? Because I don't think these platforms like create more harm than good, but they do amplify the rabbit hole of sycophancy, right? So I would have started with that. You should have started with that a tad earlier, and maybe if you could cover also the business model, like how will you make money with this. Quick feedback, but yeah, just answer these questions real quick.
Okay, so going back, I'm halfway through a PhD looking at how to make safer conversational agents. I've just written a book on that as well, too, a recent version of that called The Silence Paradox, which has been well received. Our business model is a B2C channel. Which will be consumers using the market-facing version of Common Layer, which we're going to call Frank. So there'll be a wrapper of Common Layer around Claude, ChatGPT, or Gemini. It's platform agnostic. The EAP solution is a SaaS solution we priced around $8 a seat for larger mid-sized enterprise and down to $5 a seat for Fortune 500. And that's all about scale and go-to-market. Background is a veteran and health tech founder. So we won 2 global innovation awards for my last company. Raised $1.5 million, and we built the world's first heart rate variability detection app on a smartwatch to actually detect stress signals specifically for veterans and first responders. So that's kind of us. Does that answer all your questions, Charles?
Yeah, mostly. Lance, any questions or feedback for Chris?
Yeah, absolutely. My biggest concern listening to the pitch was around moat and defensibility. Right, I've seen an awful lot of AI startups doing this kind of mental health space. We know it's being very actively pursued. And so I think you need to hit early and hard exactly why this isn't a me-too play. You mentioned you've gotten patents. I'm often pretty dubious about patents, so I'd want to understand a little bit about what is it, how, you know, why is it defensible? Why is it not easy to engineer around?
So—
You know, I know you've gotta do it on a Post-it note amount of time, But, and when you were talking, I got the impression that your customers were primarily B2B. And so I was trying to understand their motivations, who they are, why they'd be buying it. And you said it was B2C, but it sounded like also B2B is actually the bigger revenue play long run. So that was a little bit confusing to me as you went through it. And definitely your background is really important. I'm gonna double down on what Charles was saying that I would be talking about that a little bit more because that, justifies why you are— you have founder market fit in this space.
Okay, thank you. Appreciate it.
Thanks. Shane, do you want to go next?
Yeah, sorry, Chris. Thanks for the time. Thanks for taking time out of your morning. So, you know, Chris, the big thing about taking a bold swipe, like not bringing a deck, is that if you're going to do it, you need to just knock it out of the park. And I think that you had some pretty good recall. You're a smooth talker, you've thought through this, but I was kind of tuned out after 90 seconds. I want to see a visual where I can see some numbers and really kind of having both means of storytelling. I can evaluate you as a speaker, I can look at the numbers and the research. It's just the heuristic of how VCs look at companies. Don't violate it unless you have something totally magical and mind-blowing that's going to really change things. So that's kind of the big note here. I would say all together, it felt like this is just like a little too early to be taking out of the garage. The deck is a signal on that. The other part is that I'm just kind of hearing a bunch of different pieces, but I don't yet kind of know like where you put your feet in the ground and what this company is going to be. Um, so Lance was just kind of talking about like, oh well, I heard a bunch of B2B and then I heard B2C, and then your answer was we're gonna do B2C and we're gonna do B2B and we're gonna do small— like This is a diner menu right now. You know, like, I don't know if they have diners in Australia, in the US, but it's like 5 pages with 50 options on every page. I want like the— the very— I want like the tasting menu version of this. Like, I want the research, I want the background, I want exactly what your wedge is and how this thing is going to be special. That's the kind of conviction and focus that makes me confident to invest in an early stage. So there's a lot here. I think you probably have enough parts. It's about really focusing on what the most important ones are and developing those in the short amount of time you have.
All right, there you go. Let's see here, Matt. John?
Yeah, I'm now back and I can hear folks. So look, I think it's really interesting, but it's really early. And when you're really early, you can go in 20 different directions because you don't actually have customers. And so in your head, you, you've got everything sort of well designed, but then you need to be able to articulate it so other people can get the understanding in a short period of time. So a deck is really a very short story arc that you can share this with people. And most investors are, you know, I'll use the term, um, 4-year-olds. They have the attention span of a 4-year-old. And so you really kind of want to boil it down and make it very simple. And you have to pick a path. The visuals help. I don't know if the app is built or if you have schematics or the like, but you really want to explain to people how it's going to work. And there's much more than just a concept. Yeah. I think the regulatory wrapper can provide some protection. But we've seen the generalist platforms go after each of the— what we thought were defensible wrappers one by one. And then, you know, the last piece here, it really is the liability. Right? We've seen a lot of teams kind of use these types of services and end up getting in a bad place. So, you know, how are you managing that liability other than just saying we're going to be safer and better? So just some thoughts.
Thank you, John. Matt, any thoughts on your end? You can unmute yourself. By the way, I'm going to mute you. Okay, perfect.
Plus one on a couple things. Always good to look at things. I would say, you know, the, you know, sort of the point about looking at a demo, I'll broaden the scope a little bit and just say the cost of starting something is so small these days that I think most people, by the time you're pitching them, expect to see some product and actually some users and some traction and, you know, and sort of demonstrated metrics and product market fit and maybe even some revenue. So I'm not quite sure where you are on that journey, but if you have that, it's good to show it and talk about it. And if you don't have it, then you may be a little bit early. For me, I would say the two biggest things that I sort of took away that I was left wanting more. One, why won't the models just do this or kill you? Or does that mean that they're the customer? Are you providing them with safety tools? They all certainly have the capacity to use, pay for, and acquire or acquihire companies that are doing that. And then I definitely left confused on the model. You talked about B2C, but you talked about EAPs and insurers. So I just, I, you know, for me, I prefer the very simple, like, who is paying you? What are they paying? What's the job to be done? What are they paying you for?
Sunny?
Yeah, I guess my one question, Chris, was going to be around how do you prove it, I guess, to buyers and to regulators, essentially, right? That your layer is materially safer?
Can you answer to that?
Yes, we've actually engaged red teams to actually use the 3 platforms and then 2 of the platforms with our layer wrapped around it. And we validate the fact that— a good example is ChatGPT is only really responding to and triaging about 35% of dangerous behaviors on their platform. And then we wrapped ours around it, it was at 65%. And that's only with 7 of the 34 variables that we've already built, that we intend to build. So yeah, we know it's safer.
Isn't it like the one-liner, like you're the tech suicide hotline, like, or one-liner around that, that you're like, you prevent bad shit from happening and you're at an API form? What do you think about that, Chris?
I wouldn't say anything about a suicide hotline. I mean, at the end of the day, we're trying to minimize the risk. We're never going to remove risk. OpenAI said specifically 1.25 million people a week are displaying dangerous behaviors, and they're doing more, which is great. But we'll never totally minimize and reduce all of that, and we're certainly not going to be a suicide hotline. We do have a human-in-the-loop solution we're building, but at the end of the day, it's reducing the risk as much as manageable and feasible at the time with the technology available to us.
Yeah, I'm not saying like that should be a bid, but something around that to have like the 4-year-old brain understand like this, you know, like, oh, that's what we can relate to, and that's where you bridge it to the other side. But dude, thanks for coming today. Uh, we're gonna have the second Chris, uh, pitch us today. Chris McKenna this time. Uh, we can see your screen, Chris, so you can start pitching.
Okay, great. So before I show you what we built, I'll just tell you who built it. So I've been a law enforcement officer since 1999, kind of retired out in 2022, so I've worn the gear. I've been in situations where the gap between life and injury is millimeters. So it's not a theoretical problem for me. It's, it's a lived one. I'm also an inventor, a published author, patent holder, built some companies across different platforms, been told I see problems differently. So what Ironsight is, what happens when somebody who has actually worn the eyewear, felt the threat, and has the technical background to do something about it, finally does it. This is our model soldier wearing our Ironsight. Pair of eyewear. And if you could see the aesthetic actually complements the, uh, the helmet that he's wearing. So our vision is to protect yours. The protection gap that's been hiding in plain sight. So basically the standard right now for eyewear is 660 feet per second. That's your current eyewear. A combat helmet's more up at 2,200 to 2,400. 14% of all battlefield injuries are ocular, yet the eyes represent less than 0.1% of the body surface. And that's being generous. A 10-year study from the Department of Defense did show $25 billion in ocular injuries, which 43% of that was directly from IED fragmentation. But now we have these things called drones. So the Ukraine conflict shows that even 22% of any head neck casualties, they're occurring despite a helmet or a combat helmet because the FPV drones have been outpacing the eyewear standards or any type of, uh, ballistic armor standard. What we finally come up with after some time is a one frame, three stack solution. What you'd see here is the IronSight light. Which this is an immediate market entry product that can go into and compete currently with what's on the market. We can up it to do a different stack where you have a mid-threat and a high-threat. So obviously there's 3 different price points, 3 different protection levels, but we can gradually go, uh, scale that as adoption requires. The solution, as you can see, we're here with the IronSight Lite at the standard, and the Heavy is within 2,400 feet per second. Patented, Berry compliant, 100% man-made— American-made, sorry. The traction is where it really gets juicy. We've already completed a Navy IWTSD contract. We have traction with DEVCOM Soldier Center. Uh, we have engagement with PEO. We have congressional engagement. We've actually requested a $5 million plus up to submit across 4 offices. We have international distribution in place. So the market is about $4.2 billion, of which $840 is US, $1.2 billion is foreign military industrial aerospace. Total addressable market about 4.2, even if we capture 1%, we're at about $42 million in revenue on a technology that hasn't changed since the 1950s. We have a high conservative 5-year outlook, and you can see that there is a break-even period, there is a payback period within a short amount of time, again, using a very highly conservative outlook on this. Running out of time. Uh, the people behind the problem, there's traditionally 5 of us: CEO, Director of Sales, Chief Capabilities Officer, kind of a CTO research director who's contracted at the time. And where the ask is $250,000, 1% equity at a $25 mil pre-evaluation, shows where all the money would go. Exit pathways category doesn't exist yet. We're building it and the government's helping us do it. And thank you. If you wear a combat helmet, you should be wearing— I'm sorry, I'm an eyewear.
There you go, Chris. I love that. I think that the time constraint, right, brought a little stress because last time, uh, that we heard you on Sales Tank, uh, it was a bit more fluent. But, uh, good job, dude. Uh, John, did you hear that one?
Yeah, I, I heard that one. Can you, you know, let's just touch a little bit on valuation. How did you come up with $25 million as the value for the company?
So basically we've had people put in as we've tracked it along, so we created a base evaluation on the patent itself And then as we had people come in, we would be selling off some shares that, uh, you know, we had somebody come in for $250, somebody come in for $400, uh, and then you base that off the what they have. And then we look at the market, what's the market, what do we realistically think we could base sales off from the market and forecasting, and came up with a number.
Okay, but you don't have current sales?
No, we did— we had a contract with the government and that was our that was our sales to get this brought up. But we don't have a product to sell because it was an end— it was basically an engineered product. Like, can you build this? You say yes, we can build it. Now that we've built it, we're fine-tuning it, right?
I mean, so I just, you know, as an investor, I look at this and I go, why do I think this company is worth $25 million?
It's fair.
And I really don't know, right? Um, you know, so, you know, I— yeah, my general rule of thumb is where you have a company that has revenue, right? You take next year's revenue and you kind of multiply it by 4, and if it's more than that, you start asking a lot of questions as to why. And there can be reasons why, and it may be— maybe it should be less than that. But, you know, when do you think you'll start hitting revenue?
I'm sorry?
When do you think you'll start booking revenues?
I would say within— once we get the stack closed and we can actually build the product, probably within 12 months.
Okay. And the $250,000, how much runway does that give you?
That gives me about 6 months.
Okay.
So it's a short raise. Yeah.
Sorry, go ahead. As an investor, I'm putting money in, not just on the risk of the company, but on the risk you're going to raise more money.
Yes.
Which you may or may not do. So, you know, I, I would prefer to see a 2, 3, million-dollar round that will get you through to some material revenues that makes me feel that the next round will be much higher than this round.
John, you're, you know, you hit it. And I, I brought this round down just because what I'm trying to do, there's two pieces to it basically. The first piece is get the thing done in either a, in a small, not with tooling where you'd spend, you know, the $100,000 for a steel tool, but get it to where I can show somebody because to you as an investor, would you rather see something and hold it in your hand and be able to put it on your face than you put $2 million down on something?
I mean, we're more software investors, which— so that's more difficult to do, right? But, uh, but, but yes, I am— I, I understand it. But that then brings me to why we're talking about $25 million and not $2.5 million, right?
On the, on the, on the ask side, just IPO that 83x, uh, trading value, I think. I think that's the why.
There you go.
Yeah. But anyway.
Hey, let's go to the next one. Good point, John. Lance, any questions or comments?
Always have questions and comments. So it sounds like the primary customer is going to be direct to DOD, or do you think you're a subcontractor? Are there other substantial markets out there that you can reach?
Many substantial markets. You have industrial markets, mining operations, oil rigs, that type of stuff, OSHA. I mean, if OSHA decides that this is something that is needed, arc flash, there's so many different revenue markets for it. But then you have the law enforcement market, you have the firefighter, the first responder. Basically what we've done is we've taken the eyewear out of being just safety and fashion. It's a real tangible item that when you wear, you know you're going to save your eyeball.
Got it. Okay. For outsiders, I would, I would, nail down sort of the, the, you talk a little bit about the feet per second number, but just looking at that deck, that's not going to jump out at me as, as kind of where, where the customer sees the importance of what they're looking for, exactly where those thresholds are.
Right.
So make sure you're capturing that. I thought the best number there was the amount of money that they spend on eye injuries, right? That, that's a nice solid number, uh, demonstrates some, some market opportunity, uh, But I am wondering, what is the market demanding? You've got these 3 different levels. You're saying if OSHA makes these requirements, but kind of for now, I don't necessarily want to bet on them putting in regulations. I'd want to understand, you know, where is the sweet spot in terms of what they're trying to get and what are the alternatives? You know, we didn't really talk about competition, but obviously people have been trying to protect their eyes from things for a long time. You can make the argument that it's not good enough, What is it? How compelling is that case that they need to be stepping up to this? And what's the cost difference, right? How much are you asking someone to pay for that marginal protection?
Can Chris answer these questions?
Sure, I can stop.
So the first one basically is that the reason why we put in the light threat is because it's immediate cash, low-hanging fruit, because it's competing with what's already out there. As the adoption phase goes on and we say, no, you should probably be wearing this, But we have this to swim into the marketplace immediately through what's called APEL. So, and it's the same chassis, it's the same design, same tooling, same molds. It doesn't cost us anything to do that. But while we get the adoption going, we have a product we can get in and then it gets adoption on uniformity, gets in compliance with their regulatory, and it gets into the equipment and the— I'm at a loss for the word, but the supply chain. So that's why. Mm-hmm.
Right, right, right.
Yeah, ideally you end up with, certainly at least in the government, you get IDIQ contracts or whatever kinds of structures.
Hey, Chris, let's go to the next, Lance, sorry, let's go to the next investor.
Okay.
Chris, I had one question and comment, not sure if you guys agree with that, but I'm always in favor, Chris, of you starting with your background, you know, because the human attention is on you, your face, We see like all of that in your background. And to me, again, it would help to know that you're an ex-law enforcement, right? And you're just like obsessed with that. I think that's like how you should start and not like a boring slide. Um, I'm not— and your first slide I think should feature the goggles. Like, just two quick comments. Uh, Shane, any comments or feedback for Chris as well?
Yeah.
Um, Chris, I mean, everything kind of got thrown at the door when I heard a $25 million valuation and my jaw kind of hit hit the floor. Sounded a little bit like John's, John's reaction. Like, this was just like, you know, basically straight up disqualifying. Um, I would have a tough time underwriting an AI lab even at a $25 million valuation. That is something that kind of has low, you know, low ticket costs in terms of what needs to be produced and massive scalability. We're talking about a physical product that implies supply chains and necessarily smaller. So the entry valuation is going to be critical for me to really open up my notebook and start evaluating what this thing can be. So, you know, I would, I would definitely say like clean up the cap table and kind of, uh, you know, get much more realistic about this. Furthermore, like a product— yeah, I would say get much more realistic about this and bring in some customers. You know, there's a lot of opportunity here that this can go out. This is going to be a distribution play, and it's going to be the strength of the channels that you have with those buyers. Any type of hardware right now, we've got to be realistic, if it, if it is a physical product and it gets out in the real world, it is copyable. Patents are not worth the paper that it's written on. So it's all about the business, how you can leverage that background and connections to start translating your idea into revenue. And that's what I can kind of sharpen pencil on and underwrite against.
Hey, Chris, Shane, you reminded me, maybe a slide of one, the fact that you're building something physical in like an AI world in which everyone's launching AI wrappers. I think that'd be fun and too reshoring, right? Like just talk about some of the trends of why this could be more investible. Matt, any questions or comments? Muted.
Sorry, sorry. So let me start with something super positive. Our vision is to protect yours is just brilliant. It is such a great way to bring people into the conversation. So I absolutely love that. I mean, look, when I think about things like this, I always start with team and TAM. Team is obviously strong. I feel like your TAM needs a little bit of work. It's not that the bottom-up math isn't there and the top-down isn't there. Like, it's an expensive problem and there seems to be an MSRP associated with it, right? But willingness to pay matters as a really significant component of, of TAM analysis, and that was a little unclear whether there's enough willingness to pay. Um, the next thing I would say is I flag, like some of the others did, that there's a mismatch between, like, you're not asking for much, but it also doesn't get you very far, but you've got a big valuation. So it's sort of not enough money for the scope of the bet.
Mm-hmm.
If you're asking for $250, I wouldn't price it. I would do it as a SAFE and let a real venture round price it later. If you're going to ask for $2.5, then fine, price it, and price it to get to a 10% ownership stake or 20% ownership stake.
Yeah.
And finally, the last thing I've seen, I've seen a lot of B2G companies struggle because they're taking a big swing and there are just so many variables that are out of their control and visibility. When you start, when you have congressional approval on a slide, you must have a crisply articulated plan B, and quite frankly, plan B might need to be plan A. Sell this for industrial use, sell it to a small police department somewhere, get some momentum, get some revenue. Plan A could take 5 years, even if the product is perfect. And I think there are other ways to level yourself up in the meantime that give you the proof points you need to really go forward.
Chris, thanks for presenting. Up next, we're having, let's see here, Anisha. Anisha, so let's bring you on stage. We can't see your screen. Do you have a deck?
I do have a deck. Can you see my Adobe screen?
Yeah.
Acrobat? Super clear.
Amazing.
Okay, well, thank you everybody for your time. My name is Anisha Bhandari. I'm the co-founder and CEO of Checkout.ai. Just real quick, my background. I am a former Google engineering manager, and prior to that, I was working in private equity at Aries Capital. I am a Georgia Tech computer science graduate, as well as a Stanford GSB LEAD graduate. So I have quite a big background when it comes to scaling companies and working in big tech. And I took that background to start this company. So 2 years ago, Checkout.ai was kind of my brainchild because I'm a data-driven shopper and I could not find products or specific products that really like sat against what I needed. For example, I don't necessarily like polyester in my clothing. So if I'm looking for clothing without polyester, I have to go down deep rabbit holes. And then 2 years ago, as AI became more and more prominent, I decided to start Checkout.ai. So what we are doing is we are building AI sales agents for CPG brands. So we are— and CPG means consumer packaged goods— and we are a B2B SaaS company selling to companies that are primarily providers on Shopify, Shopline, WooCommerce, or any e-commerce. Merchant. Our system takes less than 30 minutes to set up. There are no developers and it lifts sales by 30%. As I quickly went over my background, my co-founder and CTO is Namit Kapoor and our founding engineer is Dhanush Kumar. Namit's background is he went to Dartmouth and Georgia Tech and he has a background in luxury retail tech at Macy's, Coach, Tapestry, and La Mer. And Dhanush is our AI/ML and MES engineer. He has done published research in applied Artificial intelligence and has been with us for 2 years. So the problem that we're trying to solve for the brands is that brands are losing revenue because merchants are going primarily to Amazon or Walmart, or they're going direct to retail, and brands are losing 50% of their MSRP to these online marketplaces. What we are doing is driving sales back to direct-to-consumer. So direct-to-consumer, again, we're on Shopify, Shopline, WooCommerce, e-commerce. Storefront merchants. When a shopper shops through an e-commerce store, they get more personalized recognition on the product that they're looking for, and in return, the brand gets customer insights and customer data intelligence. This is huge because the current mechanisms out there, such as Tidal and Gorgias, they're post-sale analytics, and what we provide is pre-sale analytics. We provide you with customer discovery. 3 years ago, this was impossible to build. The reason why I started this company 2 years back is that now with AI, it is significantly easier to build something like this where a customer can get Agenta Commerce arrived onto their store without the use of a developer through our system. So not every merchant can go and build this themselves. And one of our biggest moats and our defendable moat is not only the strength of my team, we've worked tirelessly together for the last 2 years, but also our background in luxury fashion goods and our proven gap analysis, as well as our proven analytics, our increase in sales. So as I mentioned, the AI sales agent is trained on the brand within 30 minutes. This helps a lot of brands who don't have high, like, development costs, but are willing to pay our base fees so they, they can start getting analytics quickly. So you can install, you can train, and you can convert. And we have currently 12 paying customers and our package starts at $250 a month and that goes up to $2,500 a month. And we have seen a 30% sales increase. We've seen our analytics drive marketing and sales decisions internally at companies and we are seeing a zero churn rate and we are getting about a customer once a week. So every online store will run a sales agent. We, we are doing differently. We are starting with CPG particularly. Just consumer packaged goods. Every online store, you will start seeing chat agents throughout, like, websites as you navigate the e-commerce landscape. But what's different about us is that we sell directly to the brands, and we provide them with a pre-sales chat analytic. So before the sale happens, what is the customer's behavior? And that's a goldmine for data. And we have a flat SaaS pricing, as I mentioned earlier, $249, $499, and 24-month about $400,000, $24.99 million. We have 1 or 2 customers right now in each bucket, and currently our go-to-market has been conferences, but we are looking to scale our GTM strategy. So sales agents win what is going to be the next agentic layer of commerce. So what we are asking for right now is $1 million to reach our $2 million ARR by Q4 2027. We're asking for a $1 million SAFE. We're using the standard Y Combinator format. And we actually have closed $150,000 from family offices and angel funds, and we're aggressively trying to close this round. We are currently priced at about $8 million in terms of a post-money valuation. And so the other good part of this roadmap is that we don't— we're not just ending at the Agentic Web. Where we end is going to be the intelligence layer of analytics. And we are currently, because we have such a strong engineering team, all 3 of us are engineers as well as sales, we're able to build agentic commerce, which OpenAI and Anthropic has not been able to do. What they have not been able to do is have agents shop cohesively on the behalf of the customer. And that is something we're working towards by the end of Q4 2027. And so that's it. I know I rushed through that kind of quickly. So if you have any questions, please feel free. I'm sure you do.
Yeah, yeah, thanks for the presentation.
So how do I think about TAM? How many CPG customers are there out there? Yeah, it looks like you need about 100 customers to get to your $2 million ARR.
Exactly, 100 customers is quite an easy acquisition if you look at go-to-market strategy that we're currently developing. Um, so we need, um, About 100, but there are 7 million stores on Shopify alone. We have a partnership with Shopline. Shopline is the—
So there's 7—
to be clear, there's 7 million CPG customers.
There's 7 million stores on Shopify. CPG customers globally are around 200 million, and that is an arbitrary number because they're spread across different platforms. We have a partnership agreement with a company called Shopline. Shopline has access to 600,000 stores in APAC. And we have a referral agreement with them. They will give us customers. So if we can even get, to your point, 100 customers through Shopline, then we have made our ARR.
So I mean, I can see everything sounds very competent and like, I'm not sure I fully buy that you're gonna, you know, the people who can go and raise $25 billion in an afternoon couldn't go after this space if they wanted to. They may or may not want to. Um, so I'm not, not sure about that. The— I have generally found that I like businesses that sell, um, $100,000+ packages a year. And the ones that are $10,000, $25,000, it just— you know, what happens is when you're selling to smaller businesses churn kills you, acquisition costs kill you, and the like. So I have that innate bias, um, which is something you'd need to, you need to get over if, uh, you know, if we were to move further.
Uh, do you want to take time to reply to that, Anisha, or can I go?
Um, you see, go ahead.
So I liked your background. That was good, right? Like exactly the, the feedback that I told the last guy, you did it. So that was a strong starter. 0% churn always lights some lights, right? Like, it's like people that me and Sunny hear sometime and they're like, hey, we have a 75% close rate. Yeah, but on how much clients, right? Like, and we just— that's not true. So this bit, uh, one, one light for that one. Then I was like, isn't ChatGPT deployed? Something you addressed that in the last slide, but maybe address it a bit sooner because I use ChatGPT for shopping. I use Claude for shopping all the time. It's not agentic. I don't want it to be agentic because I don't want to order like 10 of a $1,000 item and mess up my order, right? But I had this, and this is connected to my next point. I think it'd be nice to have like a quick GIF type of demo of like what you do precisely, right? Because I wasn't sure if it was— Yeah. Shopper side or business side. And just like John mentioned earlier, like the 4-year-old brain, right? Just like to start from the get-go understanding what you do. And then my favorite slide was, I'm raising $1 million to do $2 million ARR. I'm gonna steal that. I think that's incredibly smart. So you did a good job there. Do you want to address some of these points?
Yeah.
Yeah. So to— I'll start with John first. So, John, to your point about getting the $100,000 packages, given that I have a background in enterprise and having worked in enterprise, we— I do agree with you that tire kickers are not going to be worth our time. I mean, we, like, gave out tire kicker pilots to companies that were, like, less than half a million a year in ARR. Are and they were terrible to work with. So going after the bigger clients, I do agree with that, but that's why, and I failed to mention this, we do have a custom offering. We have a custom package offering that does start at that point. I sold one last year for $50,000. We could go higher, but it's something where I don't want to put so much of my engineers' time right now because we have a turnkey solution. Our turnkey solution is in and out, $500, and I lock people into an annual contract. They'll put you on an annual contract contract, I have no churn, right? So my goal is to get people in on an annual contract in the turnkey, which is less than 30 minutes of setup. It releases my engineers' time and I can move on to the next customer. The $100,000 contracts, while they may sound nice, is also a time suck for us for due to, to do the implementation. So I'm very selective about where I wanna go for the $100,000 contracts. And then having to sell to enterprise at that level, I am trying to strategically get into innovation and retail innovation rounds and offices of like Target and Walmart and Ulta, but it's been a bit of a struggle, but we're working on that.
All right, let's go to your next VC, Lance. Any questions, comments?
Yeah, absolutely. I thought great job on selling the founder market fit for your team. I thought that was, that was really strong. It seems like one of the key aspects of this is that you want consumers to be shifting from going to the Amazons and the large sort of aggregated resellers back to the original manufacturers, the people's own store, the brand store. I'd want to see some evidence that that works, that when they have this ability to tie in the AI that you're seeing the consumer behavior or some other information about the economics for the businesses. You sort of gave the pain point on how much they're losing and the overhead, but not necessarily that the customers that are adopting you are seeing those benefits. And with a dozen of them, you should be getting some, some reasonable data there.
Yeah.
And I would really like to see some information about the go-to-market strategy that is scalable. I think that the, The first few customers that you get, always you're gonna do whatever you need to do to get them, and conferences are great, but some testing that shows that you understand what your CAC is gonna be going forward would be, I think, helpful.
Yeah, okay, that's helpful. I don't think there's anything really there for me to address. Lance, do you have a question?
No, that was just feedback.
Okay, thank you.
Matt, actually Shane, any feedback or questions for Anisha?
Yeah, Anisha, I thought you did your homework. This was a solid pitch. You know, you kind of hit the key notes that you need to hit as you go through this. When I kind of, you know, the subtext of that language is this is someone who has it together and I can probably trust as an operator. So good job on that. I'm not too plugged in, like I'm not super plugged into e-commerce, but I do know that I've seen some competitors in this space and I think some competitive positioning would strengthen the pitch such that I can kind of understand exactly where your wedge is, who you're gonna beat, why you're going to beat them. This is a fairly asset-light opportunity where there are a lot of people who are going to, you know, if they are not already there, are entering pretty quickly. Lastly, I thought that you landed the plane pretty well towards the end when you said, you know, we're raising $1 million to get to $2 million in revenue, you know, this is our valuation, 1, 2, 3, stop. Don't relitigate. Like, you had, like, you might have had some extra time on the clock and like you went back in and started talking about Claude, etc. Like, when you stick the landing, stick the landing and don't give people another chance to rethink it. Pause, wait, let them react. But I think like in terms of like presentation caliber and preparation, it's one of the better ones that I've seen here on the show.
Matt?
Yeah, I'll start by saying I'm a big fan. I think you did a great job and I love the concept. I agree with much of what has been said. I particularly wanna key in on some of the things Lance said. So look, The problem is clear, the need is clear. The fact that, you know, you think you can help eroding margins with an upside of customer discovery is great. And it was totally unclear how you're gonna help the brands actually get consumers back as opposed to when they do, you have a good solution for them. I've heard this space called conversational commerce before. I'm not sure if that's how you think of it or not. And what I would say is that, you know, it's good that your implementation cycle is short I have a good friend that started a business and ran a business in this space, and it didn't really work. I mean, he sort of got to a million of ARR and then it kind of sputtered because— and hopefully this is something you can take away as an action item— even though he could demonstrate to clients that AOV was up, that LTV was up, um, uh, he fell short because it's, it's not that it was a bad idea, it's that it wasn't a big enough one. Mm-hmm. That it couldn't get enough throughput on the entirety of their customer base and enough customers back in the door. So it just got— his sale got bogged down in priorities, proof of concept, adoption. And I worry a little bit that that is the same for you. So I think the linkage there is around how you can demonstrably get a brand's customers back to them, not what you do with them once they're there?
Yeah, so that's a good question. So I don't know if you can still see my screen. So this is my screen. Do you still see the dashboard?
No. Let's put you on stage here. Yeah, we can see it.
Okay, so this is like an ex— this is the pilot example. So the total revenue and average order AOV is not showing because because this customer is actually— it's a test pilot, but this is what we actually have. It's total conversations, active sessions. This dashboard is part of the agent configuration that we include in our base package. The conversation funnel. So we show how many conversations are happening at the add to cart. And then we have all of the conversation chat data. So the consumer as well— the consumer, sorry, cannot see any of this, but the brand can see all of this and the sales attribution. And then we also have— which are the top products being looked at and being sold on the consumer, the brand's website. And we have location traffic by location, traffic by device. So, and the agent configuration part of it being quick and easy is something that we are valuing at a high cost because you don't have to actually pay a developer. So this is one example on the consumer's interaction with the brand is that we We have this proprietary built-in panel. This proprietary built-in panel helps the buyer make a choice for what they want to purchase. And we have seen a reduction in returns because the buyer trust and the buyer engagement with the chatbot has increased not only the AOV, but it's also increased the rate of— decreased the rate of returns because the panel, it's like a very detailed conversational analytics. To your point, I think we could have a deeper conversation offline with what you're just saying, Matt, because I think it's important to understand like what went wrong with the other company. And I would like to learn more about that.
Yeah, my point is that, you know, I think you're proving that you can optimize something really well. What I'm worried is that you're optimizing a shrinking piece of their business without demonstrating that you can actually grow, you know, grow or stop the shrinking of the piece of business. And if what you're doing is optimizing a shrinking piece of their business, you're going to struggle to get onto their radar as a priority.
So direct-to-consumer is usually the highest priority for D2C brands, depending on the market. Like in APAC, it's the highest— it's a low priority in APAC, but actually in the Americas, it's a high priority because the cost of Amazon Ulta, Walmart is 50% of the MSRP. So they do have site traffic coming to the direct-to-consumer site, but they're unable to convert or they're unable to understand why the consumer is leaving. And so that's where we can fill the gap. But what we do not do is we don't drive site traffic or we're not a site optimization.
No, no, I, I, I understand that. Anyway, that's just, that's why my friend's business didn't do well at the end of the day. So take that as just a cautionary note.
Sunny, any questions, feedback for Nisha?
Yeah, by the way, great job, Anisha. Wow, you crushed it. It's amazing. And also all the VCs this week, Charles, I'm super impressed. All the feedback's been just next level. I guess my question was the 100 customers, right? So you're doing one a week, 100 merchants for 500. I guess how do we get to that? If you do the numbers, it doesn't quite add up to that by December, right? So what kind of GTM What kind of GTM plans do you have in place?
Yeah, that's, that's a very good question. That's one a week organically without any GTM strategy in place. So the first and foremost and highest priority for the investment round that we get, even if I get a check tomorrow for $100,000, that's gonna go towards marketing. Then I could probably close this in like 3 months. The, so the GTM strategy is continuing to go to conferences. It is continuing to do LinkedIn outreach, which has been our biggest like conversion rate. And then paid ads, paid ads on Shopify, paid ads on Shopline so that the merchants directly on Shopify and Shopline can see our existing app and come to us that way. And then we also have incentives. So if I have a little bit more monetary cushion, I am right now giving 1 month free trial on an annual subscription, but I would like to bump that to 2 months free so it won't cost as much. So if I do, if I do 2 months free on an annual subscription, I can probably bring in more customers with the 2-month freebie and then be able to convert that way, but I need more cushion financially to be able to do that.
Hey, Charles, before we move on, I need you one more question quickly. So you, John brought it up a little bit and I felt like you kind of rushed through it, but the pink elephant in the room is this OpenAI Anthropic threat, right? Can you double-click on that one? Like why on earth would they not lean into this?
Yeah. So OpenAI has come and dipped their toes into Agenta Commerce as well as just having an online marketplace. OpenAI has not been successfully been able to do it across all of the merchants, and they don't have a mechanism for the brands and the merchants as of right now to tweak how OpenAI talks to the consumer. So what we have is an ability to set up an agent where the merchant can go in and add in all of their proprietary product information and be able to customize the agent's response to the customer and have control over that. So what we have— we're giving merchants is control, and that is in and of itself a gold mine because we're also building everything on Google Gemini. And right now, Google Gemini is if when you come through us, we increase your search index on Google Gemini Shopping because everything we've built is on GCP.
Yeah, I think the one-liner, Anisha, I love like succinct responses and VCs, right? Is that people that run businesses on Shopify, like that's not about to disappear. People are still buying from websites, right? That's your one-liner to that question.
Yeah, people will continue to buy from websites because they want to have a, relationship with the brand. Websites often usually offer coupons, they offer free shipping, they offer come back and subscribe, they offer a lot of incentives that are only on the website.
And who knows, maybe some could pick on, uh, ChatGPT could pick on your API, right? And it could give it hints of like what to respond, how to index you. You're probably thinking about something along these lines one day.
Well, right now Gemini does tap into our API because we're built on Gemini. So we have zero integration with OpenAI because I don't like them. And we have zero integration with Anthropic because I think Anthropic overdoes things.
But sorry, anyway.
Thank you.
Thank you for your pitch. Let's go to the next contender. It's definitely a special one. Put some headphones just to hear Konrad succinctly and clearly. Konrad has a very special business and like the perfect founder product market fit. So Konrad, you can go ahead, the stage is yours.
Hi everybody, I hope you can hear me well because, you know, 8 years ago I lost my voice to laryngeal cancer and now I'm speaking with the device my company did. And Deborah, Nathaniel, Paul, Dave, they're all enjoying full and active professional and private life despite being deprived of the voice because of the laryngeal cancer. So, you all know how voice is important for you, and how much would you pay if your wife would lose a voice and she would not be able to say "I love you" to you. That's why our solution, we've worked on this for the last 3 years, our electronic larynx that you put next to the neck, that the unique sound and vibration generation mechanism, and complex emotion button. So before that, people were not able to express emotions. So the old devices were— they sounded like that. They were basically robotic, and you cannot express emotions. And you know, without the amplification system, people resigned from public speeches, going out, That's why 400 users already bought our solutions across this ecosystem of products. We are serving small niche market at the beginning. Learn Academy's market is about 500,000 Learn Academies over the world, and they spend $3,000 to $5,000 every year. So $2 billion are spending on this. Old, either invasive or robotic solutions. But once we will solve this problem in 4 years, we are aiming at the bigger market, building hardware for speech, because software is voice for speech. Almost all of you heard about ElevenLabs, about other software companies, but nobody is building actually hardware layer for emotional connection. So once we solve this super difficult problem for people who don't have their natural voice, they don't have their larynx, uh, that's why we will dominate even the bigger market. So I told you about the robotic voices, but the dominating device is an implantable device, a piece of plastic in your throat that you have to replace every 3 months because of of Drakia and Fangi. It's good business for Addus Medical, it's not best business for the users, then doctors. So we are already selling this device in our competitor/partner from Texas with access to vertical markets, and we are producing the next 500 units of our own device as we speak, and they will be delivered in the next week. Uh, which start date does Consumer Electronics because it was much, much wiser way to the market and started in the US, when we will be transitioning to premium devices next. Me and Marek, we know each other for 8 years from the university, we're both technical founders. Rubal actually invented this field, user advisor, and I spent the last 1 year in Boston with her, while Magic, they care about ID, regulatory market. It's very small team, like about 7 people in total, but a very smart, small hardware team. We are not raising now, but we will be from September. So right now all the shares are in the hands of founders. The next 3 months we are mainly selling and developing our premium version for Zinging. And I would love to talk to you, what do you think about it, invite you to a concert once it will be in New York, Boston, San Francisco, but so far we are starting with Warsaw. We are from Europe, but with strong ties to both East Coast and West Coast ecosystem. Thank you so much.
I love it, Konrad. Same feedback as last founder. Why not start with your background and like show us, like if I share my screen, right? Like if I search you on LinkedIn, your like background is at Google and all of these top companies. So tell us a bit more about your background and why not start like in the first slide with that?
Yeah, very good question. So I started with my personal story. That's the most important background. I mean, why all of the, you know, the both community leaders, other Laurentian dummies, other people with speech disabilities, they love me, they invite me to all the events at my main sales channels. But the fact that I got the PhD in cognitive sciences, you know, the doctors and speech therapists. I will be at the biggest surgeon conference in Boston in the next, next month. And they basically invite me where they do not invite salesmen from these big old companies.
I love it, dude. Let's bring— let's see here. Yeah, John.
Yeah. So a couple of thoughts. One is we, you know, we have an investment in a Ukraine company called Respeecher. And Respeecher—
Yeah.
Respeecher has been used by Disney, Sony, etc. Very high-end quality of voice cloning. And, you know, I think there's a product here where they can work with people like yourself who's lost voice and they can take past recordings and build your synthetic voice. So if you're interested in partnering with them, I'm happy to connect you.
John, thanks so much, but we— that's a small field, so we all know each other.
Oh, excellent.
I know guys from RaiseVidya, but we've got a short episode of possible collaboration about 2 years ago. We didn't found a fit between their software, our hardware. Now we are in talks with ElevenLabs, the Polish, like, They also have very good software. Both of these companies are great software companies, but they lack the optimized hardware. I mean, there is a piece of— I've tested singing because we're doing this concert. I tested Bob Ross Feature and ElevenLabs today with converting my voice to a singing voice, but there is still latency. It tries to go down below 50 milliseconds, and it tries to give you the full ML emotions. I mean, because people still think that the voice is only transferring the words, and the measures used to optimize it, like, just measuring the voice quality.
But they also measure emotion as well. And we, you know, so again, if I, I would spend a little bit more time with them because they've done things like de-aging Mark Hamill's voice to produce You know, all that kind of stuff.
Incredible stuff.
Yeah, so that's number one. Number two, this is a niche market and you need to make sure you're pitching to people who know this market. You know, as this is just not an area of focus for us, so it's very difficult for us to understand addressable market, competition, what's differentiated and the like. And so I think being very selective about the VCs that you end up talking to is important. And then I suspect, you know, at the earlier stages, you know, finding angels or family office where there are individuals who have the same situation, they will understand it. They will be able to set it in context. And they will have an emotional connection that the financial investor won't have.
Love it. Let's go with Lance. Any questions, feedback?
Yeah, so I was trying to understand the market opportunity, and you said, I think, that it's a $2 billion market in just sort of dealing with the laryngeal issues. So that's the amount that's being spent on sort of devices that are substitutable with that you're replacing?
So basically there are 3 groups of products. One group of products are electronic larynges of the similar category of we are doing is about 400 million. The other group is voice prostheses is about 400 million as well. The alternative is invasive implant. A lot of money is in breathing products. So I put it all together because Usually companies do put it together and we are also developing another product in this area of breathing. So I breathe through my neck stomach. So when we—
Shouldn't you start with one, Conrad?
Yeah, we are starting with one. As you know, when I'm showing the target market, I'm showing electrolarynx is 400 million. But when I'm showing the laryngeal opening, it's 50 million. But that's a very good point. That's a very good point.
Yeah, yeah. I was a little confused about what that market opportunity exactly was. And I'm gonna double down on that thought that you want to be talking to the right kind of audience, because I'm not familiar with the different particular kinds of technologies that are out there and how they affect things. 3 minutes is not nearly enough time to bring me up to speed on the subtleties of how do these things work, why one versus the other, how do you fit into that ecosystem. And you talked about sort of, oh, and we can take this technology and expand it in this direction. I didn't really follow why, because I'm picturing something that's very specific to this condition, and the areas you were talking about expanding into didn't seem like obvious extensions. And you talked a lot about the emotional tone, but didn't really talk about how this works, that, you know, is it a, you know, you're resimulating the voice or how does that happen? I kind of feel like maybe there was a higher level, you know, 50,000-foot viewpoint of what the heck is this thing and how does it fit in that I kind of missed. And so therefore I was always playing catch-up in the pitch.
Definitely, thanks so much for this feedback. I mean, I was trying to balance this, yeah, but that's also what Charles told me that, you know, Some of the old ones, they gave you the super robotic voice, but ours got like the modes of controlling the pitch of the voice, which is the underlying of all the emotions. So like the basic signal of electrolarynx and the way how we do it is like kind of unique. And the other unique feature is the sound itself, the sound delivery mechanism. So basically I put it next to my neck and the sound is coming through the different type of mechanism. And the other part is I putting my finger on and the higher I put is the higher it is and the lower it is. And that's the transfer function inside the device is unique. And the transduction mechanism between the neck and the device is unique.
Yeah, just like one slide that explains it, right? Because we don't have your brain, Conrad. Shane, any feedback or questions?
Yeah, Conrad, so I too want to really kind of double-click into the hardware a little bit. So we do deep tech, we do hard tech, and I think like if I'm going to kind of set the scene for your product, there have been a ton of advances in synthetic voice technology. There are a lot of people who could use synthetic voice, but there's a hardware gap between this huge moment over over here and a huge acute need over here. So really helping us understand what's special about your hardware is what's going to kind of have an aha for me. So like we just kind of saw a flash of the PCB board. I wanna know like, do you guys have to like tape out your own semi chip to kind of reduce lag and have a sufficient latency? That's one vector this thing could go. Is everything out there and it's just kind of using a good semi, you know, low-latency semi edge compute device in this thing in a new application, okay, that's probably even more investible in the near term. But I really wanna know what that hardware breakthrough is because I think that's the critical bridge to the market that you're seeing. Kind of then two comments that are kind of close. So when I saw like a $2 billion TAM, I was like, ooh, a little small. I don't know, like this sounds like it's something that's gonna be pretty expensive to invest in, and the pot of gold at the end of the rainbow might not be big enough. That paired with kind of the strategy of we're going to put out a cheap device and then work up to a premium device. How can you make that $2 billion bigger by having a more valuable device is really what I would be sitting on right now. And I think from a product strategy, there's just a lot of evidence that it's right to build premium first and then go mass afterwards. There, I mean, like, fashion is the right place to see this. You can always go down shelf. It's really hard to climb up shelf. So I would say, you know, can you index your product around, we are super special, super premium, and we're going to grow the TAM because this thing is so much more valuable? And then also, who's going to pay for it? That pitch would get me a little bit more excited.
Exactly. Matt and Any questions or comments?
Yeah, let me— I'm gonna agree with a lot of things and then argue with the last one just to give you something else to think about. So the first thing I would say is, look, one challenge you have in giving presentations is that your deck has to do a lot of the work because it is a little bit hard to hear you, right? As I'm sure you know. I will say your deck did a very good job. You needed to maybe spend a little go a little slower, spend a little more time on each slide so people could both listen to you and read.
Or subtitles, maybe subtitles could be good.
Yeah, maybe subtitles, but I thought the deck did a good job. You just needed to leave slides up a little bit longer. Like other people said, the differentiator is clear, the moat is less clear. I also got sort of lost in the market size. It started off small and then it got smaller, but I wasn't quite clear why $400 million was the target. Why not go after the whole market? I don't understand the segments of the market, and there wasn't quite enough in there that sort of explained like the, the progress, the, the shrinking of the market and the progression from consumer to subscription to industrial. Um, the one thing I would sort of challenge, um, is, uh, Shane, your comment, and I don't know that there's a right answer to this, My frame on life is more technology and less fashion, which is that disruption starts at the low end and works its way up, as opposed to starting at the high end and working its way down. And I don't know that one is always true. It may be that they're true in different places, but lots of technology breakthroughs have happened by nibbling away at markets from the bottom and then getting better and better over time once they find a toehold. So I don't know that one way is better than the other, but that would be an interesting conversation to have a couple of us in longer form.
Yeah, I feel you. I mean, hey, fashion's not the right frame for this product. That was kind of the first thing that came to mind. Um, the, the thing that actually may actually be more relevant to this and kind of medical device, and at least, Konrad, this is probably relevant to a US audience where, you know, what I'm thinking about is let's get a product that we could bill insurance for. Uh, that's kind of the, the frame that I'm thinking about.
You know, that's the reason, that's the reason because we didn't start selling those premium devices yet because people do expect there will be a insured and the rainboards. So in order to move faster, you know, and get the feedback on the low-cost devices already, because people would not be able to use it if you would put it as a Class 1 medical device, wait for regulation, blah blah blah. So we started selling the cheaper version and then wait for the Yeah, yeah.
Hey, one thing that caught my attention is like, uh, AirPods Pro 5, uh, Conrad, like they're now earring aids. I'm not sure if you've checked that. That caught my attention. Not sure how it relates to your thing and not sure if it's a naive question, but is there like a Neuralink moment to it in which you, you go from, uh, injury to to actually optimization and like some kind of flywheel for VC? And again, it's naive questions, but what do you think?
I mean, the risk, this problem will be solved only if other people would like to wear device. I mean, if we would get the small device that all the people would like to wear to get the communication with agents and with others quicker. So yeah, there is this moment and probably more 5 years from now it will happen, perhaps by us or by others.
Shane, what were you saying? Sorry, dude, I cut you off.
Yeah, so I wanted to go back. So Conrad, look, it's laudable to get a better device out to many people as kind of this is a problem that you experience every day and I hear that frame. The med device zone and at least kind of looking at the US market, I use fashion as my first frame, but actually I think the Actually, a better example would be Keytruda. So Keytruda is an immunotherapy right now. It's the biggest drug in the world. It's something like $50,000 a dose. And that, you know, that is a case where the TAM for immunotherapy has exploded very quickly because the device itself is exquisite. And so like, I think there may be a better prize for you, uh, for building an exquisite device because look, laryngeal cancer is going to hopefully be at a steady state over time. We're not going to see an explosion of laryngeal cancer, I hope. But like, if for each laryngeal cancer patient, we can have a huge bill towards insurance, we might have a pretty attractive TAM, or at least an attractive product with a great premium.
Shane is going full Martin Shkreli on us.
I'm not a health investor for these reasons. There are problems, but as a capitalist, looking at the health market. Yeah, fair critique.
No, but it's an important point you're making.
I mean, my insurance companies and my users will not like this advice of you, but I do like it. I do like it.
I like it too. Sonny, any questions or feedback?
Yeah, just one comment. I thought the opener around listening to your wife say I love you having that taken away from me was definitely a bit of a showstopper. I thought that was very well done. But yeah, but you know, I got lost in kind of the emotion and I guess the numbers didn't quite come through for me as clearly, right? Like to move from something that moves my heart to something that moves from my checkbook, it usually has to add towards numbers. And so, you know, how many units have you sold, what are all the kind of the metrics around that, that would be interesting to know as well.
There you go, thank you so much, Konrad. Let's go to our next pitch here, or last one of today. Darryl, are you with us?
Indeed, I am still here. Can you hear me okay?
Yes, could be better, but you have the stage, you can present.
Thank you. Good day, everybody. It's great to be here with all of you. My name is Darrell Young. I'm the founder of Karmek. We help people build wealth through stocks as gifts. I have worked in finance my entire career. I started off as a CPA. I live here in California. But thinking back to how I got started in my career in finance, I can trace it back to something that my parents taught me. Maybe they taught you the same, which is a penny saved is a penny earned. And the reason why that resonates so much, as you can imagine, is the more you can cut out waste, all the better for you. And that's what we're attempting to do here. You can see that for the typical or the most common gift in the United States, It's a gift card. Now, I myself have probably half a dozen or so unspent in my drawer. I would venture to guess that many of you have the same, and probably people that you've given gift cards to probably have them unspent as well. But that's always the question that we as gift givers never really get the answer to. Did they use it? Did they spend it? Who knows? Now, the industry data would suggest that a lot of it it goes to waste. And there you go. That penny saved could have been a penny earned. So what does Karmek actually do? Karmek allows people to easily send a stock as a gift, as easy as sending a gift certificate. Now, I'm one of the 70% who would love to receive stocks as gifts. And the idea hit me, frankly, about 15 years ago, walking around downtown San Francisco, getting my wedding registry together, if you know what that is, I'm sure you do. At the time, I worked at Merrill Lynch. And I thought to myself, I don't want any of this stuff. I don't need linens or cookware and toaster ovens. Why can't I just register for stocks and have our wedding guests buy us that? Now, at the time, there was no mechanism to do that. Now, you can see that my mindset has shifted. It's 15 years later, I'm still married to that same lovely woman. We have a child. And I think of myself more as a gift giver rather than a gift receiver. The way that this journey got started is a 30-month process to get FINRA and SEC approval. And that approval was based upon a one-of-a-kind legal opinion, which also took quite a while to get. To give you some stat on that, I used to have hair. When I started the process, I had hair. Uh, now you see here that this forms some— something of a moat for us, because anybody who wants to get into this business would have to go through the same rigors, and there's no real way to, to jump the line. Okay, so the business model is stocks as gifts. Right now we do a fee per transaction, and we endeavor to reach our critical mass and then start to layer in other services, as you can see on on the right. So things like wealth management, being able to white label our API to other providers, and you can imagine that stocks as gifts is just the tip of the iceberg. Now, of course, it works for graduations, birthdays, holiday season, and whatnot. But it also works for things like loyalty programs for credit cards. It also works for things like scholarships. Any group that wants to transmit value from one party to another. So that, again, is just where we're at now in terms of getting our foothold. Now, in terms of our TAM, where did we get this number? Well, that's the number of gift cards that are given each year in the United States. And I think that while you don't necessarily know how much of it got wasted, per se, or never got used, the number is quite substantial. Yeah. And it's growing at 17% per year. And the reason for that is, I think, gift givers are often left with no better option. It is their least worst option to give a gift card. If I was to get on my soapbox for a moment, I would say that the bigger opportunity is what's before our very eyes right now, which is the so-called great wealth transfer. But being a startup, of course, we need to start somewhere small and get our focus in order. So we're targeting gift cards. Now, who are we targeting exactly? We're looking at moms who tend to be the wallet controllers of the household, people that are my age, Gen X, that tend to have children, but also have parents who are still alive. And they understand this before you even have to say it twice. The way that we want to reach them is a B2B2C approach going through, as you can see, their gift registries, schools, youth organizations. I have a personal background in scouting, so I'm working with Scouts, and then also through social media and the various channels. The beautiful thing about this is anybody who receives a gift can also turn around and give a gift, and we're looking to raise our virality factor as you can see there, to about 1.5. If we can do that in the coming, say, 18 months, I think that it starts to take on a virality of its own. Okay, now, early traction. Yeah, we do have some early signups. We've got a bunch of gifts that have been sent. The people that sent those gifts paid fees, and so there's a little bit of revenue. Uh, what we're also seeing is that people that have given a gift tend to repeat. So about a fourth of those people have, have done more 1. And you can see the chart at the bottom, what it's meant to represent is the people that have, for example, given 1, 2, 3 gifts, because we want to delight them so much, we think that they're going to start to reach a point where they give 7, 8, 9, 10 gifts per year. Okay, as far as our competition is concerned, you might be thinking, Well, how do you stack up against Robinhood and the like? And I say to you what I said earlier, which is we don't perceive them as our competition. We think that our competition is really the gift market. And so to me, that's gift cards. Now, one interesting thing about gifting is, uh, if you follow fintech, you would know that Acorns acquired Early Bird about a year ago. The purchase price was undisclosed, but we know that there's an appetite for this. And I'm confident in saying that Robinhood is not going to enter the space. One, they don't have the regulatory approvals, and if they wanted this in a hurry, they would just buy us. They'd be better off doing that. Okay, so, uh, having gotten that out of the way, the team is what I'm especially proud of. Uh, myself, you can see their background in finance. My CTO is a consummate, uh, engineer, software developer. Uh, Marissa over there actually was in the C-suite at Acorns. She used to report to the CEO. And then we have some potential members to our team that have enormous social media followings. Uh, we're still working out those details. We endeavor to raise a seed round, as you can see here. Uh, we think that if we're successful in the coming months, that puts us in a great position to really aggressively market for the coming holiday season. With that, I'd love to take your questions.
So just for the last minute showing, um, Daryl, uh, John. Yeah, go ahead. Sorry.
Yes, just a couple of thoughts. One is the gift card business makes a lot of money on breakage. Your model is not based on breakage. Um, yeah, I thought the presentation was very clear, though the one thing in the back of my mind was if a recipient— does the recipient have to open an account? When does a recipient have to open an account? You know, can they help leave the gift card in the drawer? Maybe they get the card when they're born. One or five, you know, from a grandparent, when to actually go into a brokerage account and where would that brokerage account be. So that, that piece wasn't clear. Um, the breakage aspect, which is a big part of Gift Cards business model, I don't think works in your case, but it ties into that last point. Um, and then, um, you know, there's there's just a lot of acquisition cost. And that, you know, how do you think of, of CAC here? The reason why a lot of acquisition costs is it's a novel idea. So you have to convince people that gifting us, you know, it's not just gifting a stock, but I gotta say I'm gifting SpaceX or I'm gifting, uh, Caterpillar. And what if, you know, you gotta think half the time between the point you gift $100 of SpaceX and they receive it, the stock's up, but also half the time the stock's down. And what's the psychological impact of that? I like the model, but, you know, these were questions that came to mind.
There's a lot to unpack there.
I'm sorry.
I'm not really sure where to dig in.
Um, now you don't need to address it all. Because I want to be, you know, sensitive for time. So, so just pick one or two points that, that you want to address.
Sure. Insofar as customer acquisition cost, we think that we could get it down to south of $10.
Okay.
Insofar as the ability to fulfill the gift, is there some friction there? Well, yes, it's a closed loop system. So right now the person would have to open up a Karmak account, similar to any financial institution, and we can then fulfill the gift. Now we can open up the gates and start to DTC shares elsewhere, rather not do that. I'd rather ACAT accounts toward us than away from us, but sorry to use industry jargon if it's unfamiliar to you.
It's okay.
But I think that the bigger opportunity for us is to try to get early users and be their first account.
Okay, but then you have to offer all of the services they would expect from a Robinhood, say.
Uh, yeah, I mean, I, I think that there's a lot of room there. So people want different things from their financial provider, right? I mean, if you want KALSHI, if you want predictive markets, if you want crypto, if you believe that that's important then yeah, you probably would fit better.
No, but even for just stocks, you've got often the ability for them to see reporting and pricing and, you know, they can make money and all, you know, they can see that within our system.
And we have deployed certain AI strategies to help people along because we do think that our target market is also in desperate need of financial literacy. And so for them, it's not about dazzling them with how many different equities they can get, how many IPOs they can be part of. It's more about just, just build wealth. Do right by your children, and you'll be fine.
Okay, let— Lance, let's go with your feedback, questions.
Yeah. I think right off the bat, I kind of had a I have a difficulty with the TAM that you were putting out there for two reasons. I don't know that you can really sort of cite the entire gift card market and say that you are substitutable for all of that. If you've done some consumer research, maybe you can say X percentage of people or X percentage of transactions, because certainly there's a lot of cards where they know someone's really into music or really into coffee, and so they're going to be specific with where they're going. But also, it's not how much the total transaction volume that matters, it's the take. And so if you've got a 7% fee structure on this, it's actually 7% of that, not the total number, right? It's always got to be in terms of what you are taking away. That K-factor is huge, right? If this is viral and it takes off, 1.5 would be gigantic. And as soon as you achieve that, you never need to talk to funders again. Again, right? This is just going to go to the moon. So the question is, why should I believe that number? Because that's a pretty bold kind of claim. And there's a bunch of things that you said in here that you throw up a number on the screen, but then your words would say, we think we can get to, which makes me wonder, where are you now? And how plausible is that reach?
Right?
I mean, I'm advising someone who's got a physical product, and he's saying, ah, you know, we can, we can get from losing 10% on every transaction on Amazon to making 30% margins, and just really dubious.
Yeah, I appreciate all of those comments. I would say you're right on the TAM, because if you're really just looking at the breakage or the number of people that, uh, just went to a gift card because they had no better idea, that's true. And as you can see here, what we really think is our obtainable market is, is a much smaller figure. Now, insofar as where did I get the competition with gift cards? Why do I keep saying we think, we think? Well, you know, going— owing to my background, I began my career as a CPA. And I'm a really horrible liar. So I have a hard time. Like, I couldn't get up on a stage talking about SpaceX and say, our TAM is the size of the US GDP, which is what Musk did. So I'm like, you know, a more reasonable figure for us is this, which I believe is achievable.
Right. So, and I'm not saying necessarily that I wanted you to be giving different numbers, but in a couple of these cases, a because would've been a great word next. So that, you know, you'd say, we're going to get here. I'm like, why are you gonna get there? We're gonna get there because we did this experiment. We've done this little test. We spent $200 here and see that, you know, our CAC is there and we're going to have this return. But you're super early stage. I know none of this is going to be bulletproof. The only thing I know about your financial projections is they are hilariously wrong because it's garbage in, garbage out.
You're too early.
But I want to understand why you got there and why you think the things.
Hey, so I'm going to—
Actually comes from a Yahoo! Ipsos survey. Survey that was done several years ago, and it ultimately concluded that about two-thirds of Americans would be thrilled to receive stocks as gifts, and I count myself among them.
Well, it's like free money. Is that the question? Like, everyone would like to receive free money, right? Like, or I mean—
Well, a gift has two parties, right? The giver and the receiver. The giver, of course, doesn't want to feel like their money was wasted. That's why every time you get a gift, you also get a gift receipt with it, because I'd rather you exchange it than just never use it. That's the gift giver's dilemma. The receiver, of course, like, well, you know, this is more stuff. I can put this in the bottom of my drawer, a bottle of wine that I may never drink, or I can maybe just get something more useful.
Yes. Let me give you some feedback there. Because yeah, I think that the cause is great, right? Like, I wish I would have had the financial education when I was younger, I think that's great. The part in which you lost me as a guy that's more on the younger spectrum of things is like gift cards. I buy them like once a year. I'm not sure if I got the gift cards argument much. It's more like gift your kids stock that, that I can get, that I can get behind. Then I checked out, you know, the website itself. I tried to try it, but it seems like it's not fully working. So that was a flag for me. It's like 7 years you've invested in that. Nowadays you can vibe code stuff, right? And make everything functional and beautiful and modern in like minutes. So, and also like, why are you raising right now if you're like 7 years in? And that was also a question that I had for you.
Well, we're not really 7 years in. The approval itself, as I mentioned, took 30 months. It's just a tough slog. And so I would effectively say that we're maybe a year and a half in, and this is at a point where the product itself is built and stable, to your point. You're right, we were trying to mess around with the landing page., in recent days. Not great timing for somebody who wanted to go take a look at it, uh, and so I apologize for that. I, I think you kind of stumbled upon something I hope that nobody would see, uh, but you know, it'll be fixed in like—
No worries, dude, uh, it's part of the game. But just one last point, right? Like, me and Sunny are big on like one-liners, and I'm not saying that's what you should do, but again, I'd love the John point, which is 4 years old brain, right? Like, it's just double-clicking on that, like, the Robinhood of gifting stocks to your kid. That's— isn't that like a one-liner? Uh, and also on this side of things, I'm not even a Robinhood user, right? Like, I invest my own companies. I don't really think that the public stock market is like— it's not very intriguing to me. But even as a non-user of my brain couldn't stop screaming Robinhood, Robinhood, Robinhood throughout the pitch, right? So, and then you said to address the elephant in the room, Robinhood should just acquire us. Like, dude, I don't think Robinhood gives any shit about your company right now. And I think they could build it in like days. And yes, there is like a compliance and getting the regulations and all of that. But they have a full department to do it, right? And that would be potentially less complicated for them to do it. So what is your moat against these guys? You know, it's like the famous question of OpenAI. What is protecting your business from them not replacing you, right? And I felt that that didn't address the elephant in the room. I would've loved to hear like a better answer. If you have one, you can give it to me.
Well, I can only say that when we went through the FINRA approval, part of the reason why it took so long is because they hadn't seen anything like it before. So I, I, I sort of inside track that nobody else had applied for this license.
Well, I know, but, but let's, let's be clear. We see a lot of startups who are doing something new and novel and interesting, which is what you're doing. If this becomes a pathway to adding $100 million, $200 million of revenue, you will attract a lot of competition. You know, and I've seen this again and again where people go, well, we're the first to think about it. And, you know, we spoke to them and they won't do it. Or like, I remember when years ago I saw the first folks who said, well, Uber is you hire car to car, but we want to put groups of people together and we're the first people to think about this. Well, then just Uber started doing share and it was just a, you know, line item.
It's a growth game. It's a founder game. It's a network effect, right? Like all of these companies blitzscaled the market and got like a massive share overnight. And what's— that's what made them what they are. Rappi is another company in LATAM, right? Like everyone talked about online grocery for decades and decades. But the first time I tried Rappi, there was a guy at my door, and I was like, okay, now it has arrived, and that's because these guys blitzscaled the market again. Um, Matt, any questions or comments for Darryl?
Simple. I think it's fantastic. Um, conceptually, I totally get it. I get the gift market. I may not be a buyer or a user of the gift market, but I get it. It's huge. It's a nightmare. Um, breakage is a big problem, and I think anytime you have a business model built on breakage, it's dying to be disrupted. And humiliated in the public square. So I totally get what you're doing. It seems like you have some moat around the work you had to go through to get it going. I'm not even sure I care about that given the size of the market and the fact that you guys are potentially sort of first in, in a big way. For me, this is all about consumer marketing and acquisition, and I just want to see proof points and understand other distribution plans.
Yeah.
And I feel like you've done the hard hard part. Um, DTC marketing on products like this, like, there are a million ways you can test it at very low cost, but you got to get, you got to get more of that going before you really get, uh, attract large capital. Um, but I, you know, I think you're, I think you're like on the precipice of something potentially massive.
Do you think, um, do you think angels would have an appetite for this? Do you think that if I had a smaller ask that would help us along.
Maybe, and then I would do it as, you know, small and do it as a SAFE and then, you know, take your proof points to market after that.
Okay, thank you for that.
Do you want to answer that question?
Not really, but I was gonna— I actually had a couple of comments. I think the regulatory— by the way, I started India as first Bitcoin exchange. So, you know, definitely can appreciate, you know, the regulatory approvals that you guys have seeked and how that can add up. I guess the market numbers shifted across slides a little bit and the traction was a bit vague. I think I heard you say a bunch of gifts, a little bit of revenue. That doesn't really cut it. So if you can be more specific, I think that would be big. What I really liked, it was kind of subtle, but this this viral GIFs begets GIFs loop, I think is very elegant. I think if you can prove the K-factor is real, then this can compound on its own. And just to leave it with one, I guess, kind of point was, you know, with regard to regulators, they still require KYC, obviously, before anyone truly owns a security, right? So I was wondering, does tokenization— so I don't know if you've been looking at Alpaca, they recently partnered with Kraken, a lot of the big guys and Binance. But does tokenization actually remove the onboarding friction or does it just move it essentially to the claim step? Like where exactly does the recipient hit the KYC wall, I guess is my deeper question.
I have not seen tokenization relieve that obligation. And so I still think that they hit it at the account application step.
Stage.
Noted.
Cool.
I like the idea.
Thanks, guys. Well, Daryl, thanks for making it happen. Um, VCs, who was your favorite, uh, today, John, out of all of the pitches?
Oh gosh, I mean, they were all good in their own way, um, for sure. Um, but I kind of like the, the, uh, CPG, um, agent company.
Lance, who was your favorite one?
Yeah, I'm gonna go the same direction. I thought Aneesha's presentation was really tight and just from kind of a quality of delivery and felt like she was ready to talk to investors.
Matt? I think those can, I agree those can be good businesses. I'm going to say there were two others I liked a little bit more, although I think they both have some work to do. One is the eyewear business. I'm sorry, I didn't write down everybody's name. And the other was the last one, Carmack. I just sort of, I felt like for very different reasons, the eyewear business, just because it's different, it doesn't feel like it's playing in the same space that everyone else in the world is that I see every day, 100 of. And Carmack, I just, I think that is both, both a massive market ready for disruption and a movement ready to happen as, as the world thinks differently about wealth building and inequality and everything else.
There you go. Sunny?
Yeah, I thought just overall Anisha, it took the prize for me today.
Yeah, I'll go with Anisha, uh, Conrad, Heart Level, Chris third. And, uh, that was a good show today. Thanks for the VCs to show up. That was the 12th
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