The Penn Wharton Entrepreneurship program just held its annual Startup Challenge (formerly the Wharton Business Plan Competition). Thirty teams of entrepreneurial hopefuls were winnowed down to just eight finalists, who competed to win the alumni judges’ hearts and minds and garner a total of $135,000 in cash and business services during the Startup Showcase on Penn’s Campus last week.
Three of the startups featured medical innovations, including an early-detection test for chemotherapy-related infections, an implant to help prevent blindness, and a method for weeding out non-emergency 911 calls. Other concepts included a modern spin on an ancient Indian skincare ritual, and a way to keep fruit from spoiling to help reduce food shortages.
Each finalist presented to the judges and took their follow-up questions. The judges hailed from companies including King Circle Capital, Karlin Asset Management, The Charian Group, Monetate, ExamWorks Group, and OraSure. They were charged with considering six categories: idea, product/service, preparation for launch, execution plan, traction and team.
In addition to formal presentations to the judges, the eight finalists performed two-minute elevator pitches to compete for the $3,000 Michelson People’s Choice Award. The pitches were streamed online so a digital as well as live audience could vote.
Here are the eight finalists in alphabetical order. Can you guess the grand prize winner? And while you’re at it, guess which team (not the same one!) took home more prizes than any other. The results are at the end of the article.
A first-generation Indian-American, Wharton graduate student Rooshy Roy says she enjoyed a rich cultural upbringing. “One of my favorite traditions growing up was… Indian women coming together to re-create distinctive [beauty] rituals our families used for centuries.” She said that as an adult she wanted to access these beauty processes, but she was too busy and they weren’t available commercially.
That was the inspiration for Aavrani, a luxury skincare company with products echoing India’s ancient beauty rituals, according to the team. The four-step ritual includes a cleanser and mask, toner, moisturizer and eye crème, featuring Indian-oriented components such as turmeric, rose hips seed and sweet almond oil.
One aspect of traditional Indian skincare that the team chose not to re-create was the emphasis on skin-lightening products. Rooshy noted ruefully that her extended family “still laments to this day… that I didn’t inherit my mother’s fair skin tone.” The team stated that Aavrani would help combat deep-rooted stereotypes and encourage women to embrace their true beauty.
They expect early adopters to be South Asian women aged 25 to 45 living in the United States and hope their products will eventually appeal to women of all ethnic backgrounds. Possibilities for product expansion include oil-based cleansers, moisturizers with SPF and lip scrubs.
Aavrani plans to sell direct to customers through e-commerce and expects a 90% gross margin “which is typical for the luxury skincare market,” says Wharton graduate student Justin Silver. The average order size will be $90 and the team expects to break even in 1Q 2019.
The Aavrani brand also has a philanthropic aspect: A portion of their annual revenues will support the non-profit Shanti Bhavan school in India, which provides free education to underprivileged girls and boys.
Aavrani plans to sell direct to customers through e-commerce and expects a 90% gross margin “which is typical for the luxury skincare market,” says Wharton graduate student Justin Silver.
Silver was previously involved with a Japanese skincare startup that he said achieved over $50 million in revenue. “With Justin’s recent experience … we realized that together we can do this,” Roy said.
“If you double a penny 30 times, you’ll have over 10 million dollars,” points out Wharton graduate student Colin Robinson. That’s the principle behind Acention, a free-to-play mobile gaming platform where users can make money by beating other users in a variety of multi-player games.
Robinson described how it works. When you download the app, the app awards you a penny. You pick a game, and the system assigns you another user who is also wagering a penny. You play a multi-player game, and whoever wins takes the pot. “Play more and more games, and you accumulate more money,” said Robinson.
Users can cash out at any time and receive their balance via PayPal. A user who runs out of money will be shown a video ad and can start over again at one penny.
Robinson says the company makes one cent of ad revenue for each commercial view, “which will be used to fund this user economy.” The venture will also make money through in-app purchases and through sponsorships connected with tournaments or user milestones.
Wharton graduate student Peter Zhu noted, “We think this is a perfect opportunity for us to destruct the industry with our new business model we call ‘Paid to Play.’” For content, the team is keeping an eye on what the top games are on the App Store and developing similar versions.
The team launched their beta in December, and Zhu said that the platform as “truly addicting.” He reported that the product already has a group of super-users who have played for over 20 hours a week over the past several months.
Robinson said Acention is now closing out its development phase and preparing for a public launch of the platform this summer. The team’s goal, he said, is “to become the next big mobile gaming company.”
Glaucoma is the second leading cause of blindness in the world. It leads to vision loss that cannot be cured or reversed, according to the Avisi Technologies team. And the affected population is growing at 6% annually. By 2020, glaucoma will affect 3.4 million Americans and 80 million people globally.
“In healthy eyes there’s a constant amount of fluid being produced and drained,” explained Wharton undergraduate Adarsh Battu. “In eyes with glaucoma, the drainage system stops working.” This leads to excessive fluid building up in the eye, which puts pressure on the optic nerve and causes permanent vision loss.
“The problem is that the [existing] treatment algorithm just doesn’t work,” Battu said. He said minimally invasive glaucoma surgeries are largely ineffective, and that even the last line of defense, which are implants called tube shunts, fail at a rate of 30% within five years. They also have serious postoperative complications such as double vision and tissue erosion.
Avisi’s new eye implant, called VisiPlate, combines efficacy with nanotechnology in a permanent solution, according to the team. “Visiplate is less than 1% the thickness of a contact lens,” Wharton undergraduate Rui Jing Jiang said. The device is also 10,000 times thinner than competing products.
The team called it a paradigm shift in glaucoma treatment because it has nanoscale thinness as opposed to the clunkier tube shunts; placement in the front rather than back of the eye, which cuts surgery time in half; and long-term biocompatibility that improves patients’ quality of life.
The VisiPlate device will be priced at $1,500 per unit, which the team says is on par with its main competitors and can be reimbursed through existing medical codes. Avisi Technologies is engaged in prototyping, planning clinical trials and working with insurers, the FDA and key opinion leaders to pave the way for their product’s success.
Do you know where the diamond on your finger, or your spouse’s finger, originally came from or what it’s really worth? You don’t, according to Wharton graduate student Michal Benedykcinski, because the diamond industry is rife with questionable practices. “As [the gem] gets excavated from the mine, all the way down to the retail store, each and every point [on the supply chain] is extremely prone to abuse.”
This fragmented and inefficient $80 billion global industry, while expected to grow around 4% for at least the next 10 years, suffers from both a lack of transparency and a lack of uniform pricing. Many banks are reluctant to provide inventory financing because there is no reliable proof of origin for the stones. “All this means a huge loss of value,” Benedykcinski said.
The Dexio team said its software product leverages 3D scanning and blockchain technology to promote transparency in the industry. With Dexio, newly-cut diamonds undergo 3D scanning to track and link them to the original stone as the gem moves through the supply chain. In addition, smart contract storage ties all the relevant information to each diamond’s unique “fingerprint.” All parties are kept accountable and have access to secure, unchanging records, which in turn gives banks greater confidence to provide financing.
The Dexio team said its software product leverages 3D scanning and blockchain technology to promote transparency in the diamond industry.
The team, which also includes Wharton graduate student HQ Han, and Timothy Clancy, a Penn engineering graduate student, has already formed partnerships with several industry players including a mining and processing company, a manufacturer/distributor, a 3D hardware scanner company and a financial institution. For pricing, Dexio is proposing a flat subscription fee of $15,000 covering platform access, or a transaction fee model of 5% of total transaction value. They are targeting midstream supply chain players.
This summer, Dexio’s project will be incorporated into Microsoft Incubator to help make its pilot a reality.
“By a show of hands, how many of us has ever forgotten to turn off the lights?” Wharton undergraduate Michael Wong asked. Of course, many hands in the audience went up. “Wow. Well, you’re not alone,” he said. He reported that the InstaHub team had surveyed nearly 200 students on campus and found that nine out of 10 admitted to leaving lights on when they weren’t using them.
Everyone knows we should turn off the lights to save energy, the team said, but changing our habits is difficult. Especially in places like college dorms and hotels, where the people staying in them aren’t the ones paying the electric bills.
Occupancy sensors, which turn on and off lights depending on motion detection, do exist, but adoption has been low, said the students. They cited statistics that in the warehousing and storage industry the uptake has been only about 34%, and it’s below 12% in areas such as education, food service, health care, offices, housing and retail. A big barrier has been the money, effort and time required to convert existing buildings.
In response, InstaHub has developed a snap-on, battery-less occupancy sensor that fits on top of existing conventional light switches. They said the installation takes less than a minute, and the product provides light automation “without the logistical and financial bottlenecks involved in replacing and rewiring conventional light switches.” It has a machine-learning algorithm that learns occupancy trends and an actuator that physically flips the light switch.
The product costs $40. Wong contrasted this with installing conventional motion detector lighting, which takes about half an hour and costs about $17 for the sensor plus between $50 and $200 dollars for installation.
The team foresees selling to entities that have pledged to reduce CO2 emissions, including many state governments and college campuses. Other potential markets include hotels, offices and elderly/disabled housing.
Wharton graduate student Shanel Fields began her presentation with two true medical horror stories. The first was about a woman having a heart attack who called 911 but there was a “code zero event,” meaning no ambulances were available to dispatch. She died while waiting over 30 minutes for an ambulance.
The second was about a two-year-old girl with an ear-piercing infection. The emergency room was overcrowded and while she waited five hours to be seen, the infection spread. In order to save her life, surgeons had to amputate both legs and one of her hands.
These are not completely rare events, said Fields. For example, “if you go to the ER and it’s overcrowded, it can increase your risk of death by 8.9%.”
A big problem that Fields wants to solve with MD Ally is that too many people use 911 who don’t need to. She said that it’s estimated that about half the volume coming into 911 are low-acuity calls, meaning not actual emergencies. “Examples that we get all the time from EMT departments are, ‘someone stubbed their toe and it’s bleeding … or they have a sore throat.’”
In addition to crowding out people who really are dangerously ill, these calls create about $3,000 each in excess cost, piling up to an estimated $288 billion each year.
Fields asserted that MD Ally’s service can eliminate 94% of those excess costs by integrating a certified medical professional into the call flow. Dispatchers, who themselves cannot legally give medical guidance, can offer callers the option of speaking with a physician immediately and to get transportation and an appointment scheduled. So instead of an expensive ambulance and emergency room trip, the person might choose a $20 Uber ride and a $150 urgent care center visit.
MD Ally’s revenue model involves charging payers a percentage of the savings that it drives, as well as charging a low annual fee to municipalities. Fields noted that her interest in emergency medicine was sparked by her father, who was a volunteer EMT.
While undergoing chemotherapy for late-stage lung cancer, Daniel Zhang’s grandmother developed severe pneumonia. “During the long hospitalization, we were afraid that this would be the end,” said Zhang, a Penn medical student. He noted that if she could have known her immune system was weak — before she developed the infection — then her doctor could have started a treatment plan.
The experience inspired Zhang and fellow medical students Divyansh Agarwal and Prateek Agarwal to create Sanguis, billed as “the world’s first hand-held, portable and inexpensive blood cell counting device.” The team noted that of the 650,000 American cancer patients who receive chemotherapy as outpatients, about 15,000 die from infections and complications that take hold because the body’s defenses are low.
Sanguis measures levels of neutrophils, the body’s primary infection-fighting cells, which the patient tests at home daily using a few drops of blood on a test strip. If their neutrophil counts are down, it’s time to call the doctor. There are potential financial savings as well: Emergency admissions due to neutropenia (dangerously low neutrophils) cost the health care system over $2 billion annually.
Zhang and fellow medical students Divyansh Agarwal and Prateek Agarwal created Sanguis, billed as “the world’s first hand-held, portable and inexpensive blood cell counting device.”
Chemotherapy outpatients do have their blood tested when they see the doctor. But often their doctor visits occur several weeks apart, whereas neutrophil levels can drop within days. The standard advice to patients is to call the doctor if they develop a fever, but by then, said Divyansh Agarwal, there is already an infection present.
“Every patient needs to be monitored, because every single patient is at risk for these complications,” said Agarwal.
Sanguis’ revenue model is prescription-based, and the product costs $600 for use over a 120-day course of chemotherapy. The team expects to achieve a gross margin of 20% in year one and 60% in years two and three. By the end of year five, they expect to be earning at least $24 million in annual revenue.
One billion people in the world go hungry — that’s one in seven — and a third of all the food on the planet spoils before it can be eaten. This is according to the Strella Biotechnology team, who say their project will help. “We hope our technology can do at least a small part in reducing these numbers,” said Penn undergraduate Katherine Sizov.
Strella is focused on apples, for a start. Sizov noted that two out of five apples rot before they can be used, representing $1.2 billion in lost revenue in the $4 billion apple market. A majority of the losses occur in the packing and distribution phase. Packers load apples into sealed storage rooms and then have no idea where the ripest ones are. They randomly select which rooms to unpack first.
However, “Strella removes the guesswork from the system,” Sizov said. She explained that her team creates unique biosensors that predict fruit maturity. The sensors measure ethylene gas, a natural substance given off by ripening fruit. With the sensors installed in storage areas, packers and distributors can monitor their produce and always locate the optimal fruit for customers, greatly reducing spoilage.
Strella’s competition is “ripe for disruption,” Sizov quipped. Its two major competitors are genetically modified crops and a company called AgroFresh which makes an anti-ripening spray coating. Both of these approaches increase shelf life, but have drawbacks including unsustainable farming practices and concerns about effects on human health, she said.
The team proposes charging $1.2 million per client every three years, and the client would in turn save about $4.2 million during that period assuming a 70% reduction in their apple spoilage using Strella’s product.
Other fruits also emit ethylene as they ripen, so the team has its eye on additional markets such as pears, kiwis, plums, bananas, melons, peaches and tomatoes.
And the Winner Is…
Sanguis won the $30,000 Perlman Grand Prize plus $15,000 in legal, accounting and strategy services.
“The next step for us is to make this a reality,” said Sanguis CEO Divyansh Agarwal. “We’ve launched ourselves well; this is a very good platform which we are excited to have, but our journey only begins here.”
He explained that the team would use the prize money mainly to refine the prototype. Then they will test the prototype on clinical samples to establish and validate the technology.
The big challenge, he said, would be actually taking the device to patients. Sanguis will be conducting more rigorous trials and “pursuing this device more aggressively, wholeheartedly, to our strategic partnerships.” Their goal is that in a couple of years, he said, “we will be at a stage where we can take this device to a patient’s hand.”
The second and third prizes also went to teams working on medical solutions. The second prize of $15,000 plus another $15,000 in legal, accounting and strategy services went to MD Ally, which also won the $10,000 Innovation Award. The third prize ($10,000 plus $15,000 in services) went to Avisi Technologies, which also won the $10,000 Gloeckner Award (given to the highest ranking undergraduate or mostly undergraduate team).
Strella Biotechnology walked away with three of the eight prizes: the $10,000 Social Impact Prize, the $3,000 Michelson People’s Choice Award, and the $2,000 Crowd Favorite Award.
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