IMSafer Angel Round

Collaborating Parents. Safer Internet. Confidential Brandon Watson, CEO

The Team
Founder
Brandon Watson – CEO
RLX, Soros Private Equity, AskMe, Microsoft
Expertise in product design, sales and marketing, executive management
Board
[removed] – CEO/Founder, [removed] Networks
Brandon Watson
Series A representative
Advisors
[removed] – US Postal Inspector, Crimes Against Children
[removed] – PhD Candidate, MIT, Bioinformatics, ex-Microsoft Development Manager
Confidential

Alarming Statistics
1 in 5 youth ages 10 to 17 receive sexual solicitation or approach annually
52% of teenagers use IM daily, 72% weekly
The FBI estimates that as many as 500K – 750K sexual predators are online on a daily basis, and there are over 18 million teenagers on line at any one time
Confidential
Sources
Online Victimization, NCMEC, June 2000
Polly Klaas Foundation, December 21, 2005
FBI, 2006

The Problem
Parental control software primarily focuses on web browsing and web content
The Internet has removed barriers of access to children
Predators cultivate relationships with children over time
Only need screen name to initiate conversation
89% of sexual solicitations of youths are on IM or chat
Social networking sites growth exacerbates these issues
There is little recourse for parents when they do discover an inappropriate on-line connection
No product exists to monitor multitude of IM networks
Confidential

Dateline NBC - Net Predators Confidential jteno72960:want me to rub your feet katiedidsings:ya jteno72960:mmmmmmmmm now i’m getting turned on. m4pixeleen: do you talk about sex and things like that? m4pixeleen: you can tell me anything, it’s ok. greendaychickk: I have m4pixeleen: it is fun m4pixeleen: you seem like a very sweet girl fleet_captain_jaime_wolfe: But, you are 13... sadlilgrrl: but if my own parents dont even love me, i dont really think anyone else will. fleet_captain_jaime_wolfe: Well, let me ask you this, if I were to offer you something, would you take it? fleet_captain_jaime_wolfe: I am looking for a younger submissive female to train...

Our Proposed Solution
Focus on protecting against bad people, not bad content
Make IM and chat ineffective as a tool for the potential child predator
Create online reputations for screen names
Give parents a conduit to let other parents know about potentially harmful IM users
Monitor all Instant Messenger networks
Based open source technologies and standards
Confidential

Current Market Failings
Protecting children online has centered around pornography and hate sites
Ineffective monitoring solutions for online relationships
Logging software requires parental audits
Time consuming and ultimately ineffective
Prone to missing potential problems
Solutions not user friendly, often requiring child to install
Fencing in children causes them to seek ways around software
Confidential

Competitive Analysis Confidential Web Filtering Web Logging Web Blocking IM Filtering IM Logging IM Reputation IM Content Alerts Cyber Patrol        Net Nanny        Spector Pro        eBlaster        Chat Watch        Norton        McAfee        Zone Alarm        Safe Eyes        IM Safer       

Target Market Confidential
Source
US Census, October 2004 data

Market Penetration Confidential Two independent studies show penetration is very low Source: Primary Company research

Market Research Confidential
Source
Primary company research, 162 responses

Market Research Confidential
Source

What’s It Worth To Parents? Confidential
Source

Market Analysis
~40M US HHs @ $30/year = $1.2B market size
Thoroughly saturated market for web filtering software
Parental control software market very under-penetrated
Existing solutions viewed as ineffective or hard to use
Parents screaming for tech solutions
Willing to pay for solutions that work
Market leaders focused on web browsing, not IM and chat, which is the real source of pain for parents
Confidential

IM Safer Solution Discussion Confidential

IM Safer – Application
Product to focus specifically on IM & chat protection
Real time packet analysis of all IM & chat conversations
Rules engine looking for patterns in text entries
Will work in conjunction with law enforcement and watchdog groups to create syntax rules
Rules database constantly updated with new grooming techniques and slang
Simple web based installation, reporting and administration for customers
Send alerts to customers via email or SMS
Immediacy based on priority of alert
Confidential

IM Safer – Network Effects
Alerts are a shared resource and pooled from customers
Incentives for parents to tell friends – the more people in the network, the more useful it is for them
Customer voting determines threat level of screen names
Proactively alert when high level threats make contact
Cannot search for status/alerts of a screen name
Access to information only available for remote screen names that have made contact with a monitored account
Confidential

IM Safer Technology Discussion Confidential

IM Safer – Client Architecture Confidential

IM Safer – Server Architecture Confidential

IM Safer – Application Confidential

Collabarent Marketing & Business Confidential

Marketing Plan
Primary goal – identify and optimize method of customer acquisition
User acquisition
Google AdWords – ramp to $50K / month budget
Referral campaign – sign up friends and family, get free service
Spot Runner (?) as a potential source for cheap cable air time
Media blitz
Capitalize on current media buzz around on-line predators
Identify PR firm to get placement in national and local television, papers and magazines
Oprah – focus on problem she cares about, solved by African-American entrepreneur
School campaign
Give the software to every school that will take it
The bigger our network and database of alerts, the more valuable to parents to also be in the network
Confidential

Marketing Plan
OEMs
Client side software delivered with new computers
Rev share on user signups
Possibility of creating skinned sites for OEMs to appear that they are providing the IM Safer service to their customers
All alerts are in shared DB for all customers
Religious Groups
Market to the groups as this is a big topic right now and the religious leaders carry sway with their constituencies
Community Building
Online safety forums
FAQs and best practices
Confidential

Business Model (monthly subs) Confidential

Business Model (yearly sub) Confidential

Business Model (yearly, upside) Confidential

Challenges
Technical
Building and maintaining the syntax for the alert rules
Meeting code development milestones
Designing a scalable database
Designing simple user interface
Business
Hiring the right people quickly
Time to market
High profile media engagements
Generating word of mouth advertising
Initial user sign ups
Low cost customer acquisition campaign
Privacy concerns
Confidential

Timeline
Formation (May – June)
Capital raising
Hiring – 4 additional dev heads (already have 1 position filled)
Software development (June – September)
Spec completion for web application and client code
Designing scalable database
Code development to release to beta
Build alert rules hierarchy
Beta testing (September – October)
Initial user sign ups – have over 250 emails of interested parents
Fine tuning application design and architecture
Bug fixing
Data center deployment
Begin media push
Product launch (November)
Market awareness
V2 planning
Confidential

Competitive Advantages
Small and focused team, passionate about the problem
Will seek relevant patents
Using network voting system to track online reputations in instant messenger context
Real time syntax analysis of IM and chat conversations with associated alerting
Alert rules and alert database become defensible competitive advantage
Huge barrier to entry for new entrants
Barrier to entry to online players because database spans IM networks
IM is not going away as a communication medium, and in fact problem will just get bigger
There is no way to game our reputation system
We control and can verify an information transaction took place
Confidential

Why Invest?
Management team with startup experience
Team passionate about protecting children on-line
Topical problem space with little product innovation or thought leadership
Problem thoroughly examined; solution well thought out
Strong revenue potential with low operating expense overhead, resulting in strong economies of scale
Solution can be extended to email and web as well
Be a part of a positive social cause
Stop bad people from using the Internet for evil
Confidential

Investment Risks
The technology is not difficult, we just have a very different way of solving the problem
Creating a reasonable and effective rules database could prove challenging
User acquisition costs are currently difficult to predict
Any of the on-line majors or parental control software providers could decide this is functionality they want to build
Customer apathy
Confidential

Future Directions
Web access
Using the same paradigm of parents casting votes for sites
Based on particular customer’s preference, filter by grouped score of site
Email monitoring
Same concept as the IM product
Know who the children are speaking to and about what
Confidential

Exit Strategy
Cash flow
Based on projections, CFLO positive occurs at 4000 yearly customer subscription collections per month
Acquisition
Major online players – short term
MSN, Yahoo!, AOL, Google
Anti-virus / security software companies – med term
Symantec, McAfee
Grow and take public – long term
Partner with major online players to grow user base
Confidential

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IMSafer Angel Round

by Brandon Watson on Aug 10, 2009

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IMSafer Angel Round — Presentation Transcript