Divshot and Addroid Shine Brightest at CROWDSTART LA Competition

By Michael Carney , written on July 10, 2012

From The News Desk

The crowd has spoken. Sort of.

Today wrapped up the multi-week CROWDSTART LA startup competition hosted by Crowdfunder and sponsored by Right Side Capital and a series of other accelerators and investors. Over this period, 63 companies created profiles on Crowdfunder and received votes from thousands of nationwide voters in a simulated crowdfunding competition.

10 finalist companies, including the five companies receiving the most votes and five more selected by a panel of judges, were invited to pitch at a live event for the chance to receive $25,000 in funding. Due to the still-uncertain nature of the JOBS Act, the capital was not provided by the public, but rather by Right Side.

The contest named a winner, a first runner up, and three second runners up. The reason I hedged earlier, saying the crowd had “sort of spoken,” is that three of these five winners, including the overall winner and the first runner up, were from the judge selected batch. It was a panel of 12 judges, not the audience, that made the final decision on this day as well.

As I said about a parallel CROWDSTART competition currently underway in Las Vegas, “Full blown crowdfunding is not possible yet — given the need for the SEC to finalize regulations — [but] this is the best model yet to combine the social proof and market validation of crowdfunding with raising real cash from real investors.”

Without further ado, the verdict:

The quality of presenting companies ranged from the extremely impressive and polished, including several young but break even or cashflow positive companies, to the more immature and conceptual. Both Divshot and Addroid stood head and shoulders above the rest.

Addroid (First Runner-Up) Addroid is the supercharged video banner ad product created by hyper-energetic founder Matt Cooper. The product upends the decade old method of creating “standard banner ads” using a series of three static images. Instead, Addroid allows agencies and brands to deploy video ads within standard banner formats without all of the cost and logistic baggage traditionally associated with the more attractive dynamic format.

Of the $11 billion dollars spent in banner ads in 2011, 80 percent went into the older less effective static banners. The reason for this is that video banners are more expensive, more time consuming to create, and more burdensome to deploy. Addroid automated the process of creating these videos, reducing the time from two weeks to two minutes and circumventing the increased placement expenses typically charged by portals like AOL, Yahoo, or Google.

Although, Addroid’s first runner up position earned it an invitation to the accelerator, the company has already joined LaunchpadLA’s second class of 2012.

When Cooper called his product “the world’s easiest to build and most affordable video ads,” it was not hyperbole. Based on a $0.15 CPM (or cost of 1,000 ad impressions), the bootstrapped Addroid is breakeven and growing. The company counts as clients Lionsgate, Lendingtree, and numerous other large online advertisers.

Cooper’s biggest obstacle at this stage is that he doesn’t have a salesforce to attack this enormous market. Based on his early metrics and the response of the judges, it’s likely that he’ll find the funding he’s seeking, adding fuel to his already raging fire.

Divshot (Winner) Divshot is a drag and drop rapid prototyping tool for Web developers and designers. The product collapses the laborious and redundant process wireframing, visual designing, and coding websites. Unlike other “wiziwig” solutions, such as Dreamweaver or other similar products, Divshot is built to augment the efforts of professionals, not to enable novices. The consequence of this decision is that the final code output is on par with what a skilled developer would have built manually and thus can be used as a foundation for further refinement.

Most interestingly to the judges was Divshot’s parallel plan to create an “interface marketplace” at some point in the near future. The founders believe that they have succeeded in modularizing user interface components and foresee a market where interfaces designed in Divshot can be bought and sold easily.

The bootstrapped company, which was a product of a midwest Startup Weekend only three months ago, has a highly polished working beta product that has been used by hundreds of participants in hackathons and startup competitions sponsored by the company around the nation.

Most impressively, when the judges asked how much money they needed to scale, the founders replied, “We’re pretty confident that we can be bootstrap profitable. We’re just looking for strategic financial partners to accelerate our trajectory.” With users pleading to pay them for their product and now $25,000 in new capital and an invitation to apply to LA’s most prominent incubator LaunchpadLA, Divshot is likely to be a name we continue to hear.