Startup snapshot: Bluedot

South Australian startup takes on Apple, PayPal for location-based payments

Adelaide startup Bluedot has developed geolocation software that uses the precise location of a person’s smartphone for payments.

The pitch

While technologies like Apple’s iBeacon or PayPal’s Beacon require a shop to install transmitter hardware with Bluetooth Low Energy (BLE) to detect when an iPhone owner is nearby, Bluedot’s technology can do this using only location sensors inside the user’s smartphone, according to its co-founders Filip Eldic and Emil Davityan.

“We can differentiate if you’re in a shop and not the one next to it,” all without requiring any additional infrastructure, Eldic told Techworld Australia. That could enable stores to charge customers without EFTPOS equipment, resulting in a lower overall cost for the business, he said.

The company has shown working demonstrations of the technology using iOS and Android smartphones. The software draws upon Bluetooth, GPS, WiFi, and cellphone towers to get the precise location of the phone.

The co-founders claim their technology is more battery efficient than others in the market.

“If you use any application with location services ... it destroys your battery in a number of hours,” said Davityan. Not so for Bluedot’s technology, he said.

“By providing something that can run in the background constantly without [draining battery] we think it’s a very powerful motivator for new applications to be built and for users to use location services consistently.”

Funding it

“We generally run a very lean operation, so on very conservative resources we’ve managed to file a number of patents and develop the prototypes and demonstrations,” Davityan said.

Davityan worked as an advisor to the prime minister on banking projects during the first Kevin Rudd and Julia Gillard administrations. At Bluedot, he handles business operations and finance. Eldic, who has an IT and finance background, works on the technical side of the business, including development, R&D and patents.

The co-founders have “invested all of our money and all of our savings, and I quit quite a comfortable job with quite a comfortable package,” Davitiyan said.

Bluedot combined the self-funding with some limited debt financing to get through the first eight to nine months, he said. In late September, Bluedot closed a seed investment round of $225,000 with a valuation of $4.5 million. The round included angel investors from South Australia.

Bluedot participated in the ANZ Innovyz START program, which is an accelerator for new startups sponsored by the ANZ Bank. Bluedot has also received support from development partner Appster, as well as KPMG, Minter Ellison Lawyers, Madderns Patent and Trademark Attorneys and Baker Young Stock Brokers.

Selling it

Bluedot is currently in a “production phase,” said Davityan.

The company started up late last year and since then has been developing prototypes and demonstrations of its technology. The company is now developing a software development kit that it plans to licence to app developers starting in April next year.

The startup has a B2B licencing model in which it sells SDK to application developers to plug it into existing applications or build new ones based on the technology, Davityan said. The company is also talking to major corporation across a range of industries, including mobile payments, tourism and handset manufacturers, he said.

Bluedot has designed the software to comply with all Australian and international privacy standards, said Eldic. It has received privacy advice from Information Integrity Solutions, which is led by former privacy commissioner Malcolm Crompton. IIS will perform an audit on the software to certify compliance, he said.

“We don’t want to view privacy as just an add-on risk at the end where you develop everything and then try to mitigate it,” Davityan said. “It’s about privacy by design.”

Bluedot has designed its technology to scale globally, and has established an advisory board—including Crompton—that will assist with US expansion plans, he said.

Startup scene

Bluedot has seen a “massive change in the Australian startup ecosystem,” said Eldic. “This has been very much reflected in the ability for us to get investors, get them to table and actually secure money on terms that are very comparable to that of the US.”

“There’s been no need for us to try to secure any investment from the US.”

The capital market in Australia is smaller than in the US, but there is money available, said Davityan. Getting funding takes “having the right fundamentals in place,” he said.

“There’s never been a lack of funds in Australia,” agreed Eldic. “It’s just been a lack of companies that have been able to build and run to the standards that they are in the US.”

Eldic said having patents on intellectual property helped Bluedot show its value to investors. “It provides you with a level of security and a level of value and also a way to mitigate the risk from the things that will affect your business model.”

The South Australian co-founders are in the process of relocating to Melbourne. While Davityan said the startup could have worked from anywhere in Australia, he and Eldic wanted to move to Melbourne to move closer to potential partners and customers and because the city has an innovative culture with a large number of startups and investors.

Follow Adam Bender on Twitter: @WatchAdam

Follow Techworld Australia on Twitter: @Techworld_AU

Previous startup snapshots:

WeTeachMe
Drivelist
Showgizmo
Health.com.au
GiveEasy
Beat the Q
Productify

If you’ve got a startup or know about a cool new Australian business, please email Adam Bender at adam_bender@idg.com.au or on Twitter (@WatchAdam).

Follow Adam Bender on Twitter: @WatchAdam

Follow Techworld Australia on Twitter: @Techworld_AU

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