On-Demand Business Model Not Sure Cash Flow
December 23, 2016
The on-demand car service Uber established a business model that startups in Silicon Valley and other cities are trying to replicate. These startups are encountering more overhead costs than they expected and are learning that the on-demand economy does not generate instant cash flow. The LA Times reports that, “On-Demand Business Models Have Put Some Startups On Life Support.”
Uber uses a business model revolving around independent contractors who use their own vehicles as a taxi service that responds to individual requests. Other startups have sprung up around the same on-demand idea, but with a variety of services. These include flower delivery service BloomThat, on-demand valet parking Zirx, on-demand meals Spoonrocket, and housecleaning with Homejoy. The problem these on-demand startups are learning is that they have to deal with overhead costs, such as renting storage spaces, parking spaces, paying for products, delivery vehicles, etc.
Unlike Uber, which relies on the independent contractor to cover the costs of vehicles, other services cannot rely on the on-demand business model due to the other expenses. The result is that cash is gushing out of their companies:
It’s not just companies that are waking up to the fact being “on-demand” doesn’t guarantee success — the investor tide has also turned. As the downturn leads to more cautious investment, on-demand businesses are among the hardest-hit; funding for such companies fell in the first quarter of this year to $1.3 billion, down from $7.3 billion six months ago. ‘If you look in venture capital markets, the on-demand sector is definitely out of favor,’ said Ajay Chopra, a partner at Trinity Ventures who is an investor in both Gobble and Zirx.
These new on-demand startups have had to change their business models in order to remain in business and that requires dismantling the on-demand service model. On-demand has had its moment in the sun and will remain a lucrative model for some services, but until we invent instant teleportation most companies cannot run on that model.
Whitney Grace, December 23, 2016
Semantify Secures Second Funding Round
August 4, 2016
Data-management firm Semantify has secured more funding, we learn from “KGC Capital Invests in Semantify, Leaders in Cognitive Discovery and Analytics” at Benzinga. The write-up tells us primary investor KGC Capital was joined by KDWC Venture Fund and Bridge Investments in making the investment, as well as by existing investors (including its founder, Vishy Dasari.) The funds from this Series A funding round will be used to address increased delivery, distribution, and packaging needs.
The press release describes Semantify’s platform:
“Semantify automates connecting information in real time from multiple silos, and empowers non-technical users to independently gain relevant, contextual, and actionable insights using a free form and friction-free query interface, across both structured and unstructured content. With Semantify, there would be no need to depend on data experts to code queries and blend, curate, index and prepare data or to replicate data in a new database. A new generation self-service enterprise Ad-hoc discovery and analytics platform, it combines natural language processing (NLP), machine learning and advanced semantic modeling capabilities, in a single seamless proprietary platform. This makes it a pioneer in democratization of independent, on demand information access to potentially hundreds of millions of users in the enterprise and e-commerce world.”
Semantify cites their “fundamentally unique” approach to developing data-management technology as the force behind their rapid deployment cycles, low maintenance needs, and lowered costs. Formerly based in Delaware, the company is moving their headquarters to Chicago (where their investors are based). Semantify was founded in 2008. The company is also hiring; their About page declares, toward the bottom: “Growing fast. We need people;” as of this writing, they are seeking database/ BI experts, QA specialists, data scientists & knowledge modelers, business analysts, program & project managers, and team leads.
Cynthia Murrell, August 4, 2016
Sponsored by ArnoldIT.com, publisher of the CyberOSINT monograph
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