1Mby1M Incubation Radar 2013: Invention Labs, Chennai, India

Invention Labs develops augmentative and alternative communication (AAC) solutions like Avaz that help children with speech disabilities develop communication and language skills. Avaz represents ideas visually, as picture symbols that can then be sequenced together to create sentences that are spoken out. Unlike its competitors, Avaz is not English-specific and not only helps in communication but also in building language skills.

Invention Labs was founded by Ajit Narayanan in 2007. An electrical engineering postgraduate from IIT Madras (now Chennai), Ajit worked at American Megatrends in the Silicon Valley for about five years before starting Invention Labs. The idea for Avaz came when a group of special schools approached Invention Labs to build an affordable “artificial voice” for children with special needs. Avaz was originally launched in 2009 as a tablet device in India. To have a wider reach, it was transitioned to the mobile app format. An Android-compatible version and an iPad app were released in 2010 and 2012, respectively.

Avaz was developed after working with a team of 25 speech therapists and nearly 300 children. Since its September 2012 launch in the Apple App store, it has more than 1,000 customers, a 5-star rating and nearly 50 positive reviews. Within three years of its launch, Avaz, with constant innovation and cost-effectiveness at its core, received the National Award for Empowerment of People with Disabilities from the President of India in 2010. The award also placed Narayanan on MIT’s TR35 list of transformative young inventors.

The app gained initial traction with schools and therapists through e-mail campaigns and webinar demos. It also has partnerships with leading autism organizations in different countries to help in taking the product to market.

Avaz is typically used by children with autism or other speech disabilities and their caregivers, including speech therapists, parents, and schools. Speech therapists use the app to improve the effectiveness of their interactions with children with special needs. The design of the app makes it easy to use for both children and therapists. It allows therapists to track sessions and customize the look and feel for each child.

Avaz also targets the untapped European market. It has been localized for use in Denmark and other European countries. About 60 units of the app are sold every month; anchor customers include the Los Angeles Unified School District.

Invention Labs also has a new, patent-pending technology, FreeSpeech, which when integrated into Avaz, improves generalization of language skills and extends the range of communication dramatically. FreeSpeech is a representation of information in a pictorial ‘map’ that captures meaning in a language-independent structure. A FreeSpeech sentence can be fed into a software algorithm called the “FreeSpeech Engine” to convert it into grammatically sound English sentences.

When Avaz was released, its main competitors were device manufacturers like Dynavox, PrentkeRomich, and Tobii. Today there are several AAC apps, including Proloquo2go, TouchChat, and LAMP Words For Life available at the Android and iPad app stores. Most of these are based in the US or Europe and are developed by former therapists or by the parents of special needs children. More than 90% of the apps are English language–specific. Avaz positions itself against the competition by being language-independent and through its presence in international markets, especially Europe. Being based out of India, it also has a cost advantage. Narayanan says the company also has a technological edge and is able to provide better apps with respect to user experience and design. None of the other apps in the market thus far has any serious technological underpinning. Avaz, with FreeSpeech, does.

The Avaz app is available worldwide at a price of $99-$150. The price is $99 in the US and $120 in Denmark. There are six million kids with special needs in the US and a total of 24 million in the US, Canada, Europe, Japan, Korea, and West Asia, the target regions for Avaz, combined. Assuming that Avaz is an appropriate app for three million kids, the total available market (TAM) is $300 million.

With FreeSpeech integrated into Avaz, the target market expands into other related markets such as dyslexia, aphasia, and so on. The incidence of dyslexia is 15% of children in the US educational system, which translates to potentially a $900 million market for a $20 app. About five million patients are admitted to ICUs annually. At $60 per app, that would indicate a market of $300 million. In-app purchases and therapy tools and services would add $300 million in upselling to the Avaz market. The TAM for Avaz plus FreeSpeech products would be $1.8 billion.

Narayanan says the company would invest in marketing Avaz and incorporating FreeSpeech into Avaz and building a strong barrier to entry. It would also explore adjacent, lucrative markets for FreeSpeech-based products that increase the market size.

Invention Labs is bootstrapped with a services business – a model discussed in more detail in this week’s Seed Capital in India series. It had revenue of about $250,000 last year and estimates revenue of $500,000 for the current year. It expects to grow to $2 million in revenues by the end of 2015 and become cashflow positive. At that point, it plans to raise more funds to expand to a larger segment of the TAM.

Narayanan says the company can potentially reach $39 million in revenues by 2018 on internally funded growth alone. It could then be a potential acquisition target for companies in the education/special ed space, such as Pearson.

This segment is a part in the series : 1Mby1M Incubation Radar 2013