August 6, 2015
Investors Are Betting On Nicotrax, Will Indiegogo Funders?
Raleigh startup with a device and software to help smokers quit the habit launches Indiegogo campaign to start manufacturing.
If a young Raleigh startup called Nicotrax is successful, it will eventually put itself out of business.
But that’s only after 1.1 billion smokers around the world quit their bad habit.
The pair of recent NC State University graduates launching Nicotrax into the world via Indiegogo (and a slew of media including a story in Fast Company) this week believe they’ve found the ultimate solution for smokers who want to quit. It’s part hardware—a case that holds cigarettes and is embedded with sensors to track when they are removed—and part software, which syncs up with a user’s mobile phone to find correlations between smoking, location and other behaviors. There’s also an app that helps a smoker make sense of the data and delivers alerts to help curb behaviors that lead to smoking.
Early investors have been intrigued because it provides a promising solution to a major health and environmental problem. There’s also a huge market. Says investor and advisor Alex Osadzinski, if Nicotrax could help even 100 million people quit smoking at $100 per case, it’d make $10 billion. And that’s with a billion smokers left to go.
But Osadzinski is most bullish on co-founders Kyle Linton and Suraaj Doshi and the unique solution they’ve come up with in the year since an early prototype called Track2Quit won top honors in NC State’s 2014 Lulu eGames and the statewide Charlotte Venture Challenge.
“There are some folks I meet who have passion but never get anything done,” Osadzinski says. “Kyle gets stuff done.”
Linton wasn’t part of the initial Track2Quit team. And he has no software or hardware development experience either. When the original four founders graduated from college last year, only Doshi, an engineer, stayed on. And he needed an entrepreneur to help him turn a great idea into a business. Linton, who had experience working for multiple startups as an entrepreneurship and business major, came on to help late last summer and eventually became CEO.
At the time, there was a hardware prototype—a clunky box that held a box of cigarettes and let users program how many to dispense each day. Linton got to work on a plan for software, recognizing the the real power of the product would be in the way it interacted with the device to predict the behavior of a smoker and help encourage and reinforce good behavior.
According to early advisor and Linton’s entrepreneurship professor Lewis Sheats, that’s the real differentiator.
“If you don’t want to quit, you’re not going to quit,” says Sheats. “For those who want to, this gives them more knowledge and the position to actually understand how to quit. That analytical piece hasn’t really existed yet.
Helping with customer discovery and design was the DXlab design incubator within HQ Raleigh, a team of engineers and designers who apply design thinking to hardware and software development. They helped Linton and Doshi shrink the size of the box so it better fits in someone’s pocket or pursue.
They helped design the app to collect data already available on a mobile device, like location, social proximity (who is a smoker with?) and speed (to determine if the smoker is in the car), along with any sort of fitness monitors. If heart rate spikes, for example, that could mean a craving is coming on and the app could alert the smoker to avoid any location or people that trigger a smoking session. Alerts can come in the form of a photo of a child or family member or a simple message of support.
The app encourages smokers to set goals that can be monitored over time. And it motivates them by calculating how many hours have been added to their lives and dollars saved as they meet those goals. It also gives the option of connecting with a counselor who can help provide in person or live support during tough times. Counselors could also prescribe Nicotrax to their patients and use it to track their progress over time.
Eventually, Linton envisions using the data collected by the app to influence public policy. For example, Nicotrax will over time know the places that people most frequently smoke around town, helping cities determine where to place ashtrays or trash cans. The data will also help Nicotrax target marketing to the places where users are most likely to buy cigarettes or see ads for them.
And that leads to other potential revenue streams besides case sales. Nicotrax could be offered through corporate wellness plans. Its data could be sold to research organizations. It could be a potential partner to a nicotine patch company or a CVS or Walgreens’ anti-smoking campaign.
“Our goal is to help people quit smoking and finding the most effective means to do that,” he says. He believes a data-driven, customized solution like Nicotrax could be attractive to several niches in the health sector.
Linton has applied for an NC IDEA grant and to join The Startup Factory—he’s made it to the final round of each. He says a big need is for more investors like Osadzinski to believe in the company’s big vision. So far, Nicotrax has landed $55,000 of a planned $100,000 round, from locals Osadzinksi and Murphy’s Naturals’ Phillip Freeman, international investor Ken Yun and Patricia Kovacevic, a Florida-based former senior general counsel for Philip Morris International. Linton met her at a nicotine conference last fall, and she’s since signed on as an advisor.
“We’re in an incredibly interesting space, but we’re young and have to find the best ways to access the right people,” Linton says. Indiegogo is the company’s next big effort to find support. A $50,000 campaign runs until early September. Four days in, Nicotrax is 13 percent of the way to funded.
Linton is relying on media attention to raise the rest of the funds—lessons learned from other successful campaigns. Fast Company was a big win, and he’s going after national media outlets too.
After the campaign, production will begin, with the first batch of Nicotrax Hero cases shipping to Indiegogo funders in December. Linton hopes to begin selling publicly in early 2016.
He could land a larger round of funding by then too.
Though Osadzinski is making few angel investments outside the local Cofounders Capital and Idea Fund Partners, he hopes to bring Nicotrax into one of the local funds’ portfolios. Either way, he’ll continue to invest.
“I like the team—they attract me like Justin Miller of WedPics, James Avery of Adzerk and Alex Adelman of Cosmic Cart did,” he says. “I’m not doing new angel investments but I’m writing quite a few checks to my existing companies. I hate to abandon a company.”