Smartphone makers like Apple, Google, and Samsung have in recent years introduced services allowing users to pay for coffee, food, and other items using their mobile devices. But several upstart companies, including Chicago-based Keyo, are betting that consumers will ultimately gravitate toward technologies that allow them to make purchases without having to take their wallets or phones out of their pockets.
Keyo co-founder and CEO Jaxon Klein said that with his company’s system, a wave of the palm is all that’s needed to verify one’s identity and pay for an order at checkout.
“When you hold up your hand to one of our devices, we look at about five million points of the unique vein structure inside of your palm in under a second,” Klein said.
Klein pitched a room of more than 500 onlookers, including scores of investors, on his company’s mission, revenue model, and growth potential Monday at the Milwaukee Art Museum. His presentation marked the graduation of Keyo—and five other startups, which also gave pitches—from Gener8tor, a 12-week startup accelerator in Wisconsin.
Keyo envisions its identification technology being used not only for mobile payments, but also as a way to gain entry to hotel rooms, gyms, and sporting events. The startup is currently working with more than 120 businesses, 30 of which are in the Fortune Global 500, Klein said. Keyo plans to make its first “significant announcement” involving a major corporate partnership in January, he added. Meanwhile, several coffee shops in Illinois are already using the startup’s hardware and software, Chicago Inno reported earlier this year.
A user can sign up for Keyo on the company’s website, and link debit and credit cards to her account, Klein said. Then, when she wants to make her first purchase using Keyo, the user enters a code associated with her account into one of the startup’s payment terminals, according to Chicago Inno. The final step in the enrollment process is to allow the terminal to capture images of the user’s palm and vein structure using an infrared camera.
According to company materials, Keyo collects a 1 percent processing fee from merchants that use its digital tools. The startup also charges for the hardware devices it develops, Klein said. These readers can be installed alongside cash registers, mounted on the wall next to doors that require an electronic key to open, or integrated into vending machines, he added. (Three Square Market, a business based in River Falls, WI, recently received national attention after it offered employees the opportunity to have microchips implanted in their hands; the chips can be used to unlock doors and buy items out of vending machines.)
One of Keyo’s competitors in the biometrics industry is Wayne, NJ-based Biyo. On its website, the company says its technology likewise identifies users by the unique vein patterns in their palms. However, Keyo emphasizes in its marketing materials that Biyo concentrates on payments, and for now is not pursuing other potential applications of the technology, like virtual key cards or tickets for events.
Klein and some of his colleagues traveled 90 miles north to Milwaukee in August, which is when the Gener8tor program kicked off. (Southeast Wisconsin is somewhat familiar territory for Keyo; Klein and the startup’s other two co-founders, Cayetana Polanco and Delna Straus, all graduated from Beloit College.)
Gener8tor and its backers provide participating companies with $20,000 in cash at the start of the program, in exchange for an equity stake of 6 to 7 percent. Participants are guaranteed a follow-on investment of at least $70,000 in the form of an uncapped convertible note.
Joe Kirgues, one of Gener8tor’s co-founders, said the 65 companies in the accelerator’s portfolio have together raised more than $120 million from investors, and created more than 1,500 jobs, since 2012.
In addition to the core 12-week accelerator program, Gener8tor runs two shorter, equity-free programs. These accelerators, known as gALPHA and gBETA, are supported in part by local colleges and universities. Gener8tor also runs OnRamp, a series of conferences that bring entrepreneurs together with executives at large corporations.
“We like to describe Gener8tor as a store with three products,” Kirgues said. “Startups plus universities plus corporations—we’re trying to create a platform for the community to engage itself in creating wealth.”
Maggie Brickerman, managing director of gBETA, said that her team set a goal of positioning at least one-third of participating companies to be accepted into a for-equity accelerator or raise money from angel investors after the gBETA program. About half of the startups that have gone through gBETA met at least one of these criteria, Brickerman said Monday.
Another leader in the Wisconsin tech community who spoke at the event was Tim Schaefer, executive vice president of client and digital experience at Northwestern Mutual. The Milwaukee-based life insurance and financial services giant was one of several local organizations that recently said it would help fund future gBETA programs in the city.
“Why is something like gBETA so important?” Schaefer asked rhetorically. “What’s so misunderstood, in my view, is that while we hear about the billion-dollar unicorn company all the time in the press, what we don’t hear about is the fact that entrepreneurship and startup activity has been on a 20-year decline in this country.”
Schaefer cited two new, locally focused $5 million venture capital funds created by Northwestern Mutual and Aurora Health Care as evidence that some stakeholders are taking steps to help Milwaukee become more of a tech hub.
And while large companies have a major role to play in making progress toward this goal, Schaefer said, it’s important for technology businesses of all sizes and stripes to have seats at the table.
“We have to listen to the voice of the tech community,” he said. “This is not a top-down thing. It takes an organic approach in order to grow a tech ecosystem.”
Here are descriptions from Gener8tor of the other five companies in the accelerator’s 2017 Milwaukee class:
—FactoryFix (Chicago): connects manufacturing companies to a vetted network of skilled workers such as machinists, maintenance techs, and automation experts.
—GenoPalate (Milwaukee): develops DNA collection kits and biomarkers that analyze genetic data and suggest foods users should eat.
—Ideawake (Milwaukee): creates software tools allowing employees at medium- to large-sized organizations to suggest and receive feedback on ideas for new products and initiatives.
—Nonnatech (New York): develops digital patient-monitoring software, which can detect early signs of patient deterioration and provide insights to healthcare providers and insurers.
—SteamChain (Milwaukee): makes software that uses blockchain technology and allows manufacturers of high-cost machinery and other equipment to offer usage-based financing to their customers.