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What I Learned at This Year’s Biggest Silicon Valley Party

Companies / Tech Stocks Aug 15, 2015 - 01:17 PM GMT

By: ...

Companies

MoneyMorning.com Michael A. Robinson writes: Of all the avenues, boulevards, lanes and streets in Silicon Valley, the most important road – the one lined with gold – is a tree-lined thoroughfare in Menlo Park.

I’m talking about Sand Hill Road.

That’s the epicenter of the nation’s venture capital industry. I first started visiting Sand Hill in the mid-1980s when I covered VC as a tech analyst.


And I was back most recently July 31, when I attended the 10th annual TechCrunch Summer Party at August Capital the summer party in Silicon Valley.

There you can meet senior high-tech execs and financiers – the Valley’s veterans – and also the leaders of vibrant startups working on cutting-edge products.

I was there as the guest of one of those young leaders – a startup CEO who has an intriguing new mobile-commerce platform for the connected car.

Now, a lot of tech investors don’t pay too much attention to the money flowing in and out of Sand Hill Road. They’ve got their eyes on the public companies they can invest in today.

I get that. Investors like you usually can’t buy into extremely fast-growing privately held startups like the “Sand Hill Club” can.

However, you should always be keeping an eye on those “youngsters,” too, if you want to make a lot of money in tech.

Today, besides introducing you to my host, Torsten Scholl, and his FormulaSMART platform, I’ll show you why that’s true.

And then I’ll show you a way that you can join Sand Hill’s VCs – and turn a very small “stake” into $520,000 or more…

This Is the “Road”

As you can see, the “road to wealth… paved by tech” I often talk about just might start at Sand Hill.

Besides August Capital, the “Sand Hill Club” includes VC powerhouses like Draper Fisher Jurvetson, Kleiner Perkins Caufield Byers and Sequoia Capital.

Those three firms alone have funded a who’s-who of tech leaders, including Amazon.com Inc. (Nasdaq: AMZN), Cisco Systems Inc. (Nasdaq: CSCO), Google Inc. (Nasdaq: GOOGL), LinkedIn Corp. (NYSE: LNKD), and Tesla Motors Inc. (Nasdaq: TSLA).

Just those five tech firms have a combined market cap of $875 billion.

And I’m not a tourist here. I formerly served as a senior advisor to the venture firm Sensei Partners LLC. And I’ve also served as a strategic advisor to more than a dozen San Francisco Bay Area startups.

This means that one of the tools I bring to you here at Strategic Tech Investor is my expertise in spotting not just winning publicly traded companies but also startups that have true market potential.

As tech investors, we usually can profit from the advances that startups make in two ways:

  • Such companies get acquired by a bigger firm we hold shares of – and that firm then enters a new market, grows sales and profits and inflates our portfolio.
  • Such firms go public and sell shares to investors like you and I.

So, as much as possible I like to meet with entrepreneurs such as TeleRetail Corp. CEO Torsten Scholl. That way I remain immersed in what will be the next profitable wave of innovations.

I first met Scholl several weeks ago over dinner where we were joined by his cofounder, Ksenia Vereshchaga, a prolific software tech developer. I saw the two again at the TechCrunch Summer Party and again when we went sailing.

Scholl is a savvy guy and a serial entrepreneur. And though he is from Germany, his story sounds like it came right out of Silicon Valley.

“I started my first company with just $600,” Scholl told me the first time we met. “And when I began, I was literally working out of the attic in my parents’ home.

“At one point, the German media said we were the fastest growing telecommunications firm in the country. And we ended up getting bought out for $230 million by a company that was backed by George Soros.”

A Boost From Soros

Scholl started Westcom in the early 1990s with a novel business plan. It provided low-cost return phone call services for U.S. military personnel just as Germany was deregulating its phone services. Westcom was ultimately sold to Global TeleSystems Inc. in 1998 in a move that left Scholl a millionaire before age 30.

And I have to say that Scholl, now in his late 40s, is really onto something with this new application. His FormulaSMART platform is designed to make his company, TeleRetail Corp., the leader in mobile payments for the connected car.

His vision is a bold one. He wants to develop the platform to the point that it can connect, enable and authenticate payments at gas stations right from the vehicle’s own dashboard.

In other words, with FormulaSMART installed in your car’s infotainment system, you’d be able to pay for your gas, coffee, air freshener and snacks without leaving your car – or pulling out your wallet.

Right now, the company and its platform are both in the early stages. Founded in 2013, TeleRetail has co-headquarters in San Francisco and Dusseldorf, Germany, and other operations in Switzerland.

Besides his extensive tech experience, Scholl has one other advantage most startups can’t match – self-funding from the sale of his Westcom.

“I’m keeping my eyes and ears open,” he told me. “It’s not so easy to find suitable investors who really understand the need for adaptability at an early stage. So we are actually using this time to really fine-tune our strategy, business system and business model.”

So far, TeleRetail is off to a solid start. Last month, it developed UniBotix, a platform that specializes in ambient intelligence, retail robotics and connected car technology.

And Scholl says his firm is in talks with a major oil company to do a beta test of the FormulaSMART interface. He’s clearly targeting a lucrative intersection of markets.

A Big-Rig Sized Market

According to data from Analysys Mason, 48% of all vehicles will be connected cars by 2024. Just in the United States and China alone, that would mean 17 million new connected vehicles annually.

Research from MarketsandMarkets shows that the connected car market could reach $46.69 billion by 2020, thanks to a compound annual growth rate of 10.82% from 2014 to 2020.

As well, tying mobile payments to gas shopping is a smart move. Gartner says purchases for all goods and services made from mobile devices will grow by fourfold this year alone to reach $214 billion.

And the total market for gas just in the U.S. is huge. Last year, according to the U.S. Energy Information Administration, we consumed some 136.8 billion gallons of gas. Prices are down, but even at today’s average of $2.60 a gallon, we’re still talking a total value of $358.3 billion.

Scholl knows his firm will face competition. For instance, earlier this year, Visa Inc. (NYSE: V) said it intends to enter the market for connected car mobile payments, though it didn’t detail how and when.

However, from his experience, he also knows that he can’t rely just one market. That’s why he’s moving along parallel tracks with his company’s technology.

TeleRetail also has developed a cloud-based point-of-sales platform that makes products and services available to consumers for direct purchase through their smartphones, connected cars or wearable tech using the firm’s software bots.

The platform uses geo-location, traffic information, Big Data analytics, vehicle integration and real-time availability to optimize the selection of products from connected vendors.

“Really, the possibilities are endless,” Scholl says. “Our platform ultimately could be deployed at restaurants, hotels – even airports and office buildings. Businesses could use it to optimize their logistics and inventory levels, for instance, or to increase their productivity and boost sales.

“That’s what’s great about being a young company,” he says. “We can remain flexible and adaptable to address whatever we think will eventually give us the best market potential. And that means we will have built a much better platform for our customers and investors.”

Coming Up Next

I’m glad I got a chance to talk to Scholl and share his thoughts and some information about his company with you.

It’s men and women like him who will be bringing us the “next” round of big technology profits when their companies make their initial public offerings.

And I’ll be hosting another conversation with another Silicon Valley startup entrepreneur to you next week. Think of it as the start of a series of looks into the “future” of tech investing.

But don’t worry – I’ll still be bringing the big ideas you can invest in right now each and every week. I’m lining up a number of those as well.

Meanwhile, I have uncovered a way that you can invest in fast-growing, privately held pre-IPO companies right now – today.

In fact, it’s your chance to invest directly alongside one of the most successful venture capitalists in the world.

This Silicon Valley mogul has already overseen millions in “exit profits” from some of the biggest IPOs of the decade, including Workday, LifeLock and Twitter.

His firm recently acquired more than two dozen privately held companies.

And he’s agreed to open “partnership” blocks for Money Morning members.

The windfall from this partnership could easily turn a small stake into $520,000 or more.

Please click here for full details before 5 p.m. Eastern today.

Source :http://strategictechinvestor.com/2015/08/what-i-learned-at-this-years-biggest-silicon-valley-party/

Money Morning/The Money Map Report

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