Venture capital will fund biometrics startups based on founders and focus over product
Fund managers at big venture capital firms want to invest in biometrics, but have a hard time judging which technologies are stronger or better positioned to scale, according to an expert presenting on the investment environment for the industry at Innovatrics’ annual event.
Šubert says it is the speed and ease of use of fingerprint biometrics make it the modality of choice for many investors, rather than the technology’s reliability.
Any other biometric technology to draw the attention of the investors must therefore replicate the speed and convenience of fingerprint matching.
Asked what they look for in a startup to invest in, professionals tell Šubert that the quality of the founders, the disruptiveness of the product, and the company’s understanding of its market and customers are most important. The key take-away here, he says, is that the best technology will not necessarily win.
Crunchbase lists 156 startups in the biometrics space, and Šubert says that while he sometimes hears the suggestion that many of those are non-profit or public sector organizations, only 3 of the 156 fit that description. He went on to review the robust funding rounds announced by biometrics startups over the past couple of years.
Šubert asked venture capital pros what trends in the space they are watching, and they named finger vein recognition, cloud-based biometrics, and multi-modal authentication. These could be major investment areas in 2023 and 2024, he says.
The technology needs to be applicable to a real-world problem, however, because “Very often they are afraid in biometrics that the technology in interesting, but it’s going to be very difficult to use it in reality,” he cautions.
Šubert also draws an interesting parallel with cloud computing. A few years ago, even many people who were already using cloud technology, such as for email services, were claiming that it would not break through into mainstream use. With consumers largely already using biometrics, a similar trend is observable in biometrics.
Startups should avoid falling in love with their product to the extent that they lose focus of their customers’ needs, or the value that they bring which will motivate them to pay for the technology, Šubert warns.
He goes on to offer advice for startups about the importance of simplicity, the relationship between innovation and hallucination, and how disruptive products are not necessarily new or revolutionary.
The topic of investment in biometrics is particularly important to Innovatrics with the launch of its Biometrics Ventures incubator.
Innovatrics’ BioCon 2022 event also featured presentations on ABIS and remote onboarding technologies, deepfakes and product demonstrations.