Israel Technology Innovation Tour 2017 Day 2: The Connected Athlete

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1 February 17, 2017 Israel Technology Innovation Tour 2017 Day 2: The Connected Athlete 1) On Tuesday, February 14, the Fung Global Retail & Technology team met with several Israel-based startups as we continued our four-day technology innovation tour of Israel. 2) Deborah Weinswig, Managing Director of Fung Global Retail & Technology, gave a presentation titled Who Is the Connected Athlete? at the LeAD Sports Technology Accelerator Launch. The accelerator is a partnership between OurCrowd and the Adi Dassler International Family Office (Dassler was the founder of Adidas). 3) We met with executives from EFI, a leader in digital design. Transitioning from 2D to 3D is speeding up the apparel design process by reducing the number of physical prototypes required and giving designers more flexibility earlier in the process. 4) We also met with leaders from a number of startups that are creating solutions that help retailers connect with consumers. These companies are focused on marketplaces, social commerce and analytics for understanding what happens both in the store and after a purchase. 5) The Fung Global Retail & Technology team will continue to report on technology innovations and thought leadership insights throughout the week. The team is also participating in the 2017 OurCrowd Global Investor Summit, where Weinswig will speak on corporate innovation. This week, the Fung Global Retail & Technology team is on a technology innovation tour of Israel. As part of our trip, we will attend the 2017 OurCrowd Global Investor Summit in Jerusalem, where Managing Director Deborah Weinswig will speak on corporate innovation during two panel sessions. The summit is the biggest equity crowdfunding event in the world and features keynote speakers from industry-leading companies who 1

2 will discuss innovation, technology and globalization. The two-day conference allows attendees to experience the future of technology through hands-on interaction with new technology and through panel discussions with entrepreneurs, innovators and investors. On the second day of our tour, we heard from executives from a number of Israeli companies and accelerators, including: Liron Slonimsky, Founder and CEO, Awear Solutions Dima Klichinsky, Co-Founder and VP of Sales, ADeens Moti Levy, Founder, COO and CRO, Mobilibuy Kfir Shapira, CEO, DSM Tool Dov Yarkoni, Chief Investment Officer, Nielsen Innovate Dan Baruchi, CEO, and Mali Cohen Denzinger, VP Marketing, Personali Horst Bente, CEO, Adi Dassler International Family Office Aviv Shapira, Senior Director of Operations and Production, Intel Sports Group, Intel Asaf Landau, General Manager, EFI Dana Aroch Soffer, Marketing Director, EFI Guy Alroy, VP Product, EFI The startup leaders we met with are focused on creating solutions for marketplaces and social commerce and analytics that help companies understand what happens both in the store and after a purchase. Below, we share highlights from our meetings with these company leaders. Who Is The Connected Athlete? OurCrowd, an equity crowdfunding company, launched a partnership with LeAD, a sports tech accelerator backed by the Adi Dassler International Family Office. OurCrowd and LeAD celebrated the launch of their partnership on Tuesday evening in Tel Aviv, along with more than 100 attendees. Source: ourcrowd.com 2

3 Horst Bente, CEO of Adi Dassler International Family Office, presented LeAD s mission and vision: to discover high-potential innovation in sports-related products and services on a worldwide scale. Bente, grandson of Adidas founder Adi Dassler, said he would like to make the legacy of [his grandfather] come back to life. He said his family s wish is to create a global sports accelerator. LeAD s first accelerator launch will be in December in Berlin. Fung Global Retail & Technology Managing Director Deborah Weinswig gave a presentation titled Who Is the Connected Athlete? at the launch event. She noted that more than $1 billion was invested in sports technology last year and explained that future sports brands will offer consumers more than just a product they will create a sports ecosystem. Notable existing ecosystems include Under Armour s fitness community, which includes 165 million users served by the company s various apps, and Adidas s micoach wearable technology system. Under Armour s network was built through acquisitions; the company paid more than $700 million for the MapMyFitness, MyFitnessPal and Endomondo apps, which interact with its UA Record app. Source: Fung Global Retail & Technology The connected athlete will most likely be found in China, Weinswig noted. In 2016, 58.2 million Chinese consumers used fitness and nutrition apps, and this number is expected to grow at a CAGR of 9.5% from 2017 to China is also developing its own fitness apps, such as Keep and Codoon. Weinswig also said that smartwatches and fitness bands dominate today s wearables market, which is expected to grow from $15 billion in value in 2016 to $21 billion in 2017, according to the CTA. IDC expects smart clothing and accessories share of the wearables market to grow from 2.2% in 2016 to 7.3% by Today s wearables offer real-time coaching (as exemplified by Oakley s Radar Pace) and enhance performance (as exemplified by Halo Sport s headphones, Vi s artificial intelligence personal trainer and the IBM Watson enabled technology offered by Under Armour). Connectivity and gamification enable healthy competition by using elements from video games such as badges, levels, prizes and leader boards. Fitness bands track progress versus goals and allow the wearer to compete with and challenge friends or strangers. And the Peloton cycle enables the rider to access a wide variety of workouts, participate in live and on-demand rides and classes, and share workouts to social media. Yet many wearables still end up in the sock drawer. Fitbit reported a 70% churn in 12 months in its IPO filing and Gartner reported a 29% abandonment rate for smartwatches and a 30% rate for fitness trackers. The reasons consumers cite for abandoning these devices include not finding the device useful, getting bored with it, breakage or it being aesthetically unappealing. 3

4 Source: efi.com Technology has also enabled the rise of the professional video gamer, or cyber athlete. Global revenue for competitive gaming, or e-sports, is estimated to have hit $890 million in 2016, up 19% from 2015, according to SuperData Research. Asia leads the sector, comprising about 37% of the global market, and e-sports participants skew heavily male. Virtual reality (VR) technology has enabled a spectator experience that is almost better than being at a sports event in person. VR provides new ways to reach players and fans who are viewing sports outside stadiums, arenas and pitches. In addition, stadiums are becoming connected in order to enhance the viewing experience. Connected devices and big data are used to transform insights and offer geopersonalized experiences. Viewers can use such technology to order food to be delivered to their seats and to create replays and view real-time footage on smartphones. Vendors can also use the technology to manage crowd flow and stock items more intelligently. Replay Technologies also presented its mixed-reality solution at the lead sports tech accelerator launch which was most recently highlighted at the Super Bowl and the Olympics. Replay was acquired by Intel in March 2016 for $170 million. Replay provides a freed video format that uses high-resolution cameras and intense graphics to allow viewers to experience sporting events from any point of view. Aviv Shapira, co-founder of Replay said that freed has the power to redefine how consumers watch sports. With very few surrounding details, the company announced that it is launching Macore, which will enhance and enrich the human experience by extending our presence beyond the known limits of time and space. 4

5 Digital Design, Marketplaces, Social Commerce and Brand Analytics We also met with executives from EFI, a leader in digital design, as well as with leaders from startups that focus on technology solutions to help retailers connect with consumers at nearly every stage of the purchase journey. These startups focus on marketplaces, social commerce, analytics for understanding what happens both during and after a purchase, and branding. EFI Making Design High-Tech EFI is using 3D digital sampling in the fashion and apparel industry. The company is taking 2D to 3D, moving design from low-tech to high-tech. EFI is working with Under Armour to provide the company with tools that allow it to collaborate directly with designers, thereby saving time and resources. Source: efi.com With digital design, the design process can be reduced from the average of six months from design to production to two months for a completed garment. It improves the supply chain workflow by reducing the number of required steps, such as the need to create prototypes. Another benefit is that digital design means fewer fittings are required. Finally, digital design provides flexibility, allowing for fast decision making with quick on-screen updates providing 3D, real-time results that users can see, update and manage. All of these benefits help apparel companies save time, labor and material costs. Marketplace Remarketing We also met with DSM Tool, which automates the drop-shipping business by allowing manufacturers to ship goods directly to the retailer or consumer. DSM Tool defines itself as a marketplace remarketer. It manages the drop-shipping process and helps enable online drop-shipping. DSM Tool is a platform for clients who have ebay shops, but the service is intended for anyone who has a marketplace shop. The platform helps clients price items, and remarkets the items at a higher price. Today, DSM Tool works with approximately 1,500 ebay sellers. Marketplaces are the next wave for brands because they offer many benefits, including low or no inventory cost, low risk and high customer satisfaction. Many traditional retailers are pursuing marketplaces as a complement to their retail strategy. 5

6 Source: DSMTool.com Social Commerce: Bringing the Store to the Traffic Mobilibuy created a software platform that enables brands, retailers and distributors to create virtual stores anywhere. The company places digital screens in desired locations and converts them into storefronts. The product offering shown on the screen is modified based on the time, date and shopper profile. Consumers are able to spot and shop the product using a mobile device, and buy it. The goal is to bring the store to where the consumers are. Mobilibuy, there is no personnel, no physical store and no need to maintain stock in popular areas, where real estate can be a major expense. The company is currently working with Yahoo!, the Brooklyn Nets, the NBA, Kraft and Unilever. Source: Fung Global Retail & Technology 6

7 February 17, 2017 Source: Mobilibuy.com Analytics: Helping to Inform Before, During and After Purchase ADeens is using in-store digital signs to affect the customer experience. The company s mission is to increase and optimize sales for retail and grocery chains, and it believes it is providing the vision of how stores should look in the future. ADeens uses smart, automatically generated ads that are created based on information from a retailer s ERP system. The service automatically generates sales-pushing commercials based on such information, and it relies on developed machine-learning algorithms to launch these ads on controlled screens. Source: Fung Global Retail & Technology Source: ADeens.com 7

8 Personali is a retail technology software company focused on machine learning. Its platform predicts, in real time, a consumer s willingness to pay, and offers different levels of incentives based on behavioral economics. For example, an incentive window will appear and offer the consumer a discount if he or she uses the offer within a certain amount of time. If the consumer is about to abandon a cart, it may offer a game. Personali is not a loyalty program; rather, it operates on a retailer s site, unseen by the consumer. The system uses numerous parameters to draw elasticity curves of segments of what people will pay based on price discount for conversion. The company reports that its model is helping drive conversion levels 30% higher and that those conversion rates can be reached with discounts of less than 5% on products. Source: Fung Global Retail & Technology Source: Personali.com 8

9 Awear Solutions makes wearing clothes a customer loyalty experience by rewarding consumer behavior and continuously gathering data about an item s usage after it leaves the store. Today, fashion brands do not know what really happens to their product after it leaves the store. Awear created a chip that allows fashion brands to use the IoT and big data analytics to learn about and reward customer behavior post-purchase. Consumers can use Awear s mobile app to receive rewards for wearing a purchased fashion item or accessory and to receive targeted promotion offers at specific times and locations. Source: AwearSolutions.com Nielsen Innovate Fund, an Incubator Focused on Entrepreneurs with Access to Nielsen and Fortune 1,000 Companies Founded in 2013, the Nielsen Innovate Fund is an early-stage incubator and investment fund focused on analytics, artificial intelligence, big data, retail, e-commerce, market research, consumer behavior, the IoT, media, VR/AR, campaign measurement, advertising and marketing. Nielsen Innovate operates an incubator under a license agreement with The Office of the Chief Scientist of Israel. The fund s goal is to help early-stage startups become successful by providing mentoring, operational support and introductions to investors. The incubator supports entrepreneurs who possess disruptive and opportunistic digital technology know-how and are looking to convert ideas into projects and global businesses. The fund provides $2 million in seed funding, with additional funds based on progress and follow-on rounds, as well as collaborative workspace, strategic guidance and administrative support. 9

10 Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: Hong Kong: China: Erin Schmidt Research Associate Hong Kong: 8th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) New York: 1359 Broadway, 9th Floor New York, NY Tel: FungGlobalRetailTech.com 10