Tech pioneers have their work cut out for them in the traditionally old-school diamond sector, but incubators can give them a hand.
Transforming ideas into viable businesses is no simple task. Although the diamond sector relies on innovative technologies for mining, manufacturing, retail and jewelry design, the scope for new, market-altering start-ups is narrow.
Former De Beers executive Jonathan Kendall recently founded two start-ups that aim to fill that niche: Diamond Ancestry and Diamonds4Crypto, which specialize in blockchain and cryptocurrency purchases, respectively.
“The industry is naturally conservative,” remarks Kendall, who also serves as executive vice president of the World Jewellery Confederation (CIBJO). “The level of innovation is to some extent limited by the range of products we ultimately sell to consumers. Jewelry has been designed using a relatively consistent range of components for centuries. This can make many start-up ideas difficult to fund and integrate into the industry’s supply chain or retail environment.”
Echoing this sentiment is Zeev Maimon, CEO of financial technology and logistics start-up Mazalit. “The diamond industry can be characterized as having both an openness to try new products and new technologies, and a certain conservatism that sometimes hinders change,” says Maimon, whose company aims to support diamond dealers through access to funding, sales support and digital marketing services.
There are other challenges holding start-up businesses back as well. “There are very few venture capital options within the industry,” explains Kendall. “Many [companies] have presented their ideas, but few have successfully won significant funding. Often, business plans are not commercial enough or, even worse, simply do not have any sense of reality.”
Room to grow
Incubators that nurture ideas and critically assess new companies’ commercial viability are there to provide a reality check. One such accelerator is the Diamond Tech Innovation Center at the Israel Diamond Exchange (IDE). Since its inception in 2017, the center has focused on assisting Israeli start-ups in the initial stages of development. It looks for businesses concentrating on diamond- and jewelry-related services, such as 3D printing, e-commerce, artificial intelligence, and data handling. Part of this incubator’s appeal is its location within the IDE complex, since that helps facilitate connections between new and established businesses.
“Our goal is to bring companies into the technological incubator that can serve and promote the Israeli diamond industry,” says IDE president Boaz Moldawsky. One Diamond Tech success story he cites is Inova Diamonds, a company that uses augmented reality to help market diamonds, watches and jewelry online. This lets consumers virtually try on jewelry and examine stones, he says, adding that Inova has now reached over one million active shoppers.
Another notable incubator in the diamond industry is De Beers Group Ignite, which currently supports De Beers’ own Lightbox lab-grown jewelry line, its Tracr blockchain program, and its GemFair responsible-mining initiative, among other projects.
Ignite uses a structured method that goes far beyond simply bouncing ideas off of engineers, scientists and technologists. To benefit from De Beers support, start-ups must present evidence of their viability and prove they have a good understanding of their target customers’ problems. This then “unlocks metered funding for development, commercialization and scale,” according to Neil Ventura, strategy and innovation executive at De Beers Group. “We recognize that we have more ideas than we could ever practically incubate. Filtering and the rigorous testing of assumptions is key to getting a few bold, high-potential ideas that progress throughout the incubation process.”
Ignite’s role is to “create a safe space and provide the tools and support for people to experiment with new approaches,” according to Sarandos Gouvelis, its head of incubation. At the same time, he says, objectivity and the ability to avoid getting “too personally vested in solutions” are critical traits for successful collaborators. If a concept does not validate assumptions and expectations after three to four months, the initiative team must be ruthless and decide “whether to persevere with plan A, pivot to plan B, or retire the idea.”
While incubators have been beneficial to many new enterprises, Maimon found that they weren’t the right option for his business. “We considered and explored joining various industry-oriented accelerators, but very quickly realized that it suited us less as a company. A major [advantage] of the ‘accelerator experience’ is the friction with other ventures and entrepreneurs and learning from each other. Because the diamond industry is a very limited business niche, the few existing accelerators we knew did not offer such an experience.”
Looking outward to see what other industries are doing could be helpful to the diamond sector’s start-up scene. The Diamond Tech Innovation Center’s upcoming “hackathon” may be a good place to start. The event, says Moldawsky, aims to “create connections and locate technologies from other industries that can be adapted to the diamond industry.”
In the meantime, boosting the visibility of opportunities and funding options — both within and outside the trade — is a step that can give new business owners the confidence to present their ideas to the market.