An Eagle startup has raised $200,000 as part of a new program at Boise State University intended to support Idaho’s entrepreneurial community.
SpriteRE, founded in April, helps match online consumers with digital lenders and expedite that process using artificial intelligence, said CEO Adam Stein.
“Digital lenders acquire hundreds or thousands of records,” meaning that acquisition costs for a new loan can be very high, Stein said. AI and machine learning helps those direct lenders look at digital leads and pick out the best prospects, potentially raising the companies’ loan conversion rates from 3 to 4 percent to 5 to 6 percent. While this doesn’t sound like much, it makes a difference.
“We can never get that from 4 percent to 8 percent, but if we can get that to 5 to 6 percent, that’s extremely meaningful to all parties in the food chain,” he said.
“He’s actually our first rapid launch startup resident,” said Mike Sumpter, executive director of the Venture College at Boise State University. (See box.) It’s part of a program the college started this spring called the Incubator. Sumpter and his colleagues met Adam this spring and introduced him to students as an example of the rapid launch process.
“He’s attempting to take something to market quickly,” Sumpter said. “It’s fairly ambitious, and that’s something I wanted our folks to be around, and see what that work ethic looked like, and what sort of prep you needed to be positioned to do that.” This fall, Stein will be offering workshops to students on how to pitch for large investments, Sumpter added.
“I thought it would be cool to work in the midst of students, and take the company from launch to exit in front of a bunch of students,” Stein said.
SpriteRE, which so far has been funded by Stein himself, has raised $200,000 thus far, including $100,000 from a single investor he wouldn’t name. Using engineering teams in Cleveland and India, including contracted help, he hopes to have a version of the product completed for beta testing by June 18. “It won’t have all the bells and whistles that a second generation would have, but the data learning will be all there,” he said.
After that, and further development, the program could go several different ways, ranging from being “white labeled” by a company, with the SpriteRE program used under the company’s name, to an early exit, where he actually sells SpriteRE to another company.
SpriteRE is an example of “fintech,” short for “financial technology,” or companies that provide financial services using applications without necessarily being banks or credit unions, though they may partner with them. “Removing friction from the customer journey,” such as what SpriteRE is intended to do with mortgages, is listed as the most important trend for the retail banking industry, according to the 2018 Retail Banking Trends Report, while “Use of big data, AI, advanced analytics, and cognitive computing” is second.
This isn’t Stein’s first fintech startup. He founded LoanTek in 2010, which he sold to Bankrate in 2015 for an undisclosed price. It was funded by the Treasure Valley Angel Alliance and the Idaho TeCcenter, he said.
“He stays below the radar,” said Scott Fischer, who was chief financial officer for LoanTek. “His first startup stayed below the radar even though a big Wall Street firm bought him. He’s got the biggest companies in the industry and in online mortgage banking who have committed to start working with him. So I think he’s got something really cool there. “
Fischer, recently named president and CEO of Prosperity Organic Foods, also runs CFO Idaho, a consulting group of chief financial officers who outsource themselves to startups and high-growth companies who need the services of a CFO but aren’t big enough to hire their own yet. CFO Idaho is providing a CFO for SpriteRE, he said.
Entrepreneurial college functions as an interdisciplinary hub
Adam Stein’s work with SpriteRE is using an entrepreneurial resource at Boise State University, the Venture College, founded in 2014.
“We’re trying to create a culture here that runs the full gamut, from businesses that are already at revenue and doing well, to students just starting to incubate their ideas, so everyone can learn from each other,” said Mike Sumpter, who was named executive director of the Venture College a year ago.
The Venture College is an interdisciplinary hub of resources with an educational mission, Sumpter said. “We bring folks in, and do our best to get them what they need to move their business forward,” he said. “A lot of what we do is very much pre-launch,” so the college provides training in making pitches, networking, and canvassing markets. “All the basic kinds of entrepreneurial skills you need to acquire.”
At capacity, the incubator program in the Venture College will have six or seven businesses at different stages of development, as well as a number of students, Sumpter said. “We’ve been running about 100 a semester, counting all programs” such as courses and workshops. The fall semester at the incubator has already received a number of applications but he hasn’t yet determined the size of the class, he said.
Aside from Stein, the Venture College has two other residents, one of whom is the Women in Leadership resident, Tara Russell of fathom, a purpose-driven travel company, Sumpter said. “Her role is to show our students what successful women leadership businesses look like.” The other is Ryan Vasso, CEO of Reply Pro, an alumnus of the Venture College program, Sumpter said.
In return for resources such as space, mentorship, and advisor programs, residents also commit to being involved in the college’s programs. Sumpter said.-