(The writer is a Reuters columnist. The opinions expressed are his own.)
By Mark Miller
CHICAGO (Reuters) - Kai Stinchcombe isn’t your typical Millennial in Silicon Valley. At age 30, he has launched a company that targets a consumer group that doesn’t interest most tech companies in the neighborhood: the elderly.
Stinchcombe’s company, True Link, is posed to roll out a debit card tied to software that can guard unsuspecting seniors against financial fraud and abuse. It’s meant to address a huge, underreported problem that results in financial losses of $2.9 billion a year in the United States, according to a Metlife study. And fraud will only worsen with the aging of the baby boom generation, which will create a vast, tempting group of targets for scammers hawking things like fake charities, magazine subscriptions, overpriced hearing aids and home repairs.
But when Stinchcombe has pitched his idea to funders, potential partners and even employees, the reactions have been frustrating.
“People will say, ‘Oh this is great - you could issue this card to teenagers, too.’ Or, ‘How are you going to get out of that niche market for elderly people!’ A niche market? Are you kidding me?”
Indeed, the potential market for products targeting aging Americans is hardly a niche - and its growing at an explosive pace. The population of people over age 65 will hit 81 million in 2050, up from 37 million in 2005, according to the Pew Research Center. That translates into 19 percent of the total population, compared with 12 percent in 2005.
Stinchcombe, True Link’s chief executive officer, thinks Silicon Valley tends to ignore that trend line because of its youthful culture. He has raised $1.1 million to launch the card, which will hit the market early next year. But he also has allied True Link with Aging 2.0, a new business accelerator in San Francisco focused on spurring innovation in products and services for the 50-plus market.
True Link is one of 11 early-stage companies named to the first class of Aging 2.0’s GENerator accelerator program, which provides entrepreneurs with access to mentors, investors and market research opportunities among older adults.
The companies range in their maturity level. Some are very early-stage businesses with bootstrap or angel funding, others have raised their first rounds of investment capital. Along with True Link, they include CareLinx, an online marketplace for professional in-home caregiving services; Lift Hero, a platform for a door-to-door age-friendly ride service; and Sabi, a product design firm with a focus on aging. This first six-month program will culminate with a customer and investor conference in May 2014.
Aging 2.0 is based at the Institute on Aging in San Francisco, a hub of aging services that includes two independent living facilities, an adult day care center and a University of California at San Francisco geriatric clinic. The founders are two entrepreneurs who got interested as a result of their experiences with aging family members and associates.
Katy Fike, a 34-year-old former investment banker, quit the business to earn a Ph.D. in gerontology, and Stephen Johnston, 40, a Harvard MBA, worked in the mobile phone industry before getting involved with dementia research and funding.
“I grew up with considerably older parents and grandparents,” Fike says. “My grandmother broke her hip at age 90, so I was exposed to the problems and stresses with caregiving at a young age, but never thought it was something to focus on professionally. But on 9/11, I was in the World Financial Center, and after that I knew I didn’t want to spend my life doing spreadsheets until 2 in the morning.”
Her mother encouraged her to read about innovations in geriatric medicine, and she was hooked. “I was struck by the magnitude of opportunities, and how they could help people I always cared about.” She enrolled in a master’s degree program in gerontology at the University of Southern California, ultimately sticking around to finish a Ph.D.
Aging 2.0’s operating costs are covered through sponsorships bought by established organizations in healthcare and longevity. It also has taken small equity stakes (a maximum of 2 percent) in the GENerator companies, which may - or may not - provide longer-term returns.
Fike and Johnston selected the first GENerator cohort after hearing pitches from 1,000 companies at 30 events they had hosted in 10 countries. The companies are focused on enhancing independence, boosting social connectivity, empowering family caregivers and improving care coordination. The founders range in age from mid-20s to mid-60s, and include entrepreneurs and seasoned executives from organizations including Google, Apple, McKinsey & Co., NASA, Morgan Stanley and Stanford University.
“The quality and quantity of entrepreneurs coming into this space is surging,” Fike says.
Stinchcombe got interested in elder financial abuse after his grandmother became a fraud target. She began experiencing memory loss at age 83 and over time fell victim to a growing number of financial frauds. “First it was donating to sham charities. My mother and I would try to get her off the mailing lists, but by the time you do that, they’d have sold her name to someone else. She also got the famous late-night phone call from someone claiming to be her favorite grandchild, stuck with a broke-down car in Canada, who needs her to wire money. There was a company that was recommending an extraordinarily overpriced hearing aid.”
Stinchcombe has a background writing analytics software, and conceived True Link as a way to curb financial abuse by funneling seniors’ financial transactions through a single debit card that can be monitored through software, and online by family members.
The product is a Visa debit card, linked to an FDIC-insured bank account. For a $10 monthly fee, True Link’s software will be able to block unwanted purchases, issue e-mail alerts to family members for any suspicious-looking transactions and set total monthly dollar amounts for certain categories of spending.
“The idea is to get away from a blunt instrument for the caregiver, like reviewing bank transactions every day or giving a cash allowance,” he says. “That’s a pain, it takes a ton of time and it limits the freedom of the elderly person. I wanted something more automated and low-touch, so the person goes on with an independent lifestyle - but when something does go wrong, the family can be looking out for them.”
It sounds like a win-win - unless you’re peddling magazine subscriptions.
For more from Mark Miller, see link.reuters.com/qyk97s
Follow us @ReutersMoney or here. Editing by Douglas Royalty