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 … Next Page »