Editor’s note: This is another in a series of stories profiling companies presenting at Venture 2003.When financial institutions talk about “churn”, they aren’t talking about butter but real money.
Every customer that signs on for business and then leaves — for whatever reason — becomes a money drain for the banks, credit unions and such that make money off a wide variety of services, from loans to account fees.
Studies have shown than 30 percent of a bank’s customers will leave within 18 months — and 50 percent will move on within 30 months.
Stopping churn and gaining new customers is what Charlotte-based startup MindValve is beginning to address. Given a kick-start with $720,000 from Academy Funds, the brainchild of
Dr. Mirsad Hadzikadic, who also is dean of College of IT at UNC Charlotte, already has won Wachoiva as a customer and developed a proof of concept project for Bank of America.
By developing business intelligence software that tracks and predicts consumer activity.
“The proprietary technology platform developed by MindValve combines data mining and real-time predictive analysis through advanced machine-learning methods, thus creating a new class of business intelligence solutions,” says David Maw, MindValve’s chief executive officer. “At the heart of the platform is a patent-pending, conceptual clustering algorithm that provides a unique method of segmenting and profiling data. This approach is more tolerant to noise and missing data than other approaches and is flexible in its ability to work with disparate data sets.”
By tracking and predicting customer behavior, Maw says MindValve can help financial institutions better meet the needs and expectations of each individual user. He also says MindValve clients can use the same information to win new customers by better understanding the services they need.
The benefits of keeping customers are many, he says.
“Improving retention by 5 percent would add three percent to top-line growth,” Maw says. “A 1 percent decrease in attrition adds $200 million to the bottom line, according to one of the largest banks.”
MindValve is one of 24 companies preparing for presentations at Venture 2003, the Council for Entrepreneurial Development’s 20th annual venture capital event.
As it did a year ago, Local Tech Wire is featuring in-depth profiles of presenting firms built around a Q&A with a company executive as well as a Fact Box of important information. One profile will appear each day.
LTW put together a Q&A designed to not only produce facts about the presenters but also to give each a chance to state the case for venture capitalists to invest.
Venture 2003 concludes today in Chapel Hill.
Answers for MindValve were provided by Maw.
Times are tough. If you had only one chance and one paragraph to convince an investor, how would you answer this question: “Why should an investor choose your company?”
We are building solutions to address the biggest and most painful problems that banks face. Customer satisfaction, intelligent acquisition, retention and profitability is the key to banking in the next century. Billion dollar problems create billion dollar opportunities.
What is the “pain point” (or points) you address for your customers?
Low customer satisfaction and high attrition rates account for a 5 percent — 10 percent lower bottom line for most banks. One major bank stated that “decreasing attrition by 1 percent could have a $250 million effect on the bottom line”.
What makes your company unique? Do you have a proprietary and/or a
Patented technology? Please explain why it is unique and what the status is of any patent filings.
The proprietary technology platform developed by MindValve combines data mining and real-time predictive analysis through advanced machine-learning methods, thus creating a new class of business intelligence solutions. At the heart of the platform is a patent-pending, conceptual clustering algorithm that provides a unique method of segmenting and profiling data. This approach is more tolerant to noise and missing data than other approaches and is flexible in its ability to work with disparate data sets.
What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?
SAS and SPSS. They primarily design tool sets for analysts.
MindValve creates actionable information that can be used directly by the business manager to explore, generate ideas and solve problems in a real-time environment. MindValve’s unique ability to deliver high-end analytic support to the business manager saves weeks to months in the decision making process that usually occurs in working with analysts. We put the power of information into the hands of the decision makers
Does your company already generate revenue? If so, how much? Are you cash flow positive?
Nominal revenue at this point. We are transitioning out of product development stage.
What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?
According to Meridian Research, the customer segmentation and analytics software market is expected to be over $900M in the banking industry by the year 2005. IDC predicts that the packaged analytic applications market will grow to $6.2 billion in 2005.
What will you do with the invested funds? What is the timeline for product delivery? If you have existing products and services, how will additional funding help you expand your company, if that is the intention, or will you develop new products?
Mindvalve’s first product will be ready for delivery this summer. Additional funds are needed to fulfill our product offering, build our sales and marketing teams and to build out a strategic partner program.
What do you want from an investor other than money?
We are looking for a hands-on investor with multiple contact points in our target markets and are able to syndicate a deal.
Why will investors be impressed with your management team?
Our team’s diversity of experience form academics to entrepreneurs has shown that we know how to go from concept to success in a fiscally responsible way.
What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?
Exit strategies evolve around possible acquisition by a strategic partner. Many CRM and ERP companies are looking to bolster their analytic offerings and are doing so thru acquisition.
Just the facts about MindValve:www.localtechwire.com/article.cfm?u=3915