investment – Bredemarket

It’s easy to toss around phrases like “customer-focused benefits” without comprehending what they mean.

So I’ll provide an example.

Years ago I wanted to learn about a particular company—and no, I’m not going to name the company—so I read what it said about itself. And what did the company’s product marketing say?

“We’re a unicorn!”

For the benefit of normal people, when businesses talk about being a unicorn, they are saying that the firm, based upon funding from private investors, has a theoretical valuation of over $1 billion. For example, if Ventures R Us pays $100 million for 10% of the company.

Well, this company was really proud about its unicorn status, to the exclusion of everything else.

With reason, when you think about it.

Taking an example from my own industry, if you are the police chief of a medium sized city that needs an automated biometric identification system, would you risk buying one from a provider with an actual or theoretical valuation of less than $500 million?

Because isn’t company valuation the most important thing to a prospect?

What? It isn’t? Prospects care about results?

(For the record, you can buy a perfectly fine ABIS from firms with actual, not theoretical, values of less than $100 million.)

In fact, I would go so far as to say that if the first sentence of your company description includes the word “Series” followed by a letter from the beginning of the alphabet, your focus is the investment community rather than your prospects.

But if the first sentence of your company description talks about what you deliver to your customers, then you’ll impress both your prospects and the discerning investors. Nothing magical about that.

Take care in how you market your products.

“Have to update my chart again.”
C. Maxine Most of Acuity Market Intelligence. From https://twitter.com/cmaxmost/status/1418306725510193152

Since I’m treading into financial territory here, I should disclose that Bredemarket has financial relationships with one or more of the companies mentioned in this post. This is not investment advice, do your own due diligence, bla bla bla.

CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=243386

I don’t monitor the market enough to know if this is part of an overall trend, but there has been a lot of biometric and digital identity investment recently. Both Biometric Update and FindBiometrics (and other publications such as FinLedger) have written about some of these recent investments, and IPVM has published its acquisition analysis (for subscribers only). Here’s a partial list of the biometric and/or digital identity companies who have received new funding (via investors, IPO, or acquisitions) recently:

I am not a financial expert (trust me on this), but I suspect that these companies are benefiting from two contradictory factors.

The apparent WANING of the COVID threat suggests better market performance in the future.
Some biometric and digital identity investments are very attractive precisely BECAUSE of the COVID threat, and the resulting attractiveness of remote and touchless technologies.

Of course, markets run in cycles, and it’s hard to predict if this is just the beginning of money flowing to biometrics/digital identity companies, or if all of this will suddenly come to a grinding halt. Remember how hot so-called “fever scanners” were a year ago, until their deficiencies were identified? And remember how Microsoft was prompted to divest from Anyvision not too long ago?

It’s possible that a number of external factors, such as an increase in government bans of facial recognition use, consumer resistance to digital identity, or the entry (or re-entry) of much larger players into the biometrics and/or digital identity markets, could dampen the revenue hopes for these funded companies.

Of course, investors are used to analyzing risk, and in many cases the investments with higher risk can yield the greater rewards.

It’s all just a game.

Tag Archives: investment

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