Connecting The Dots On Veriluma
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Just as we got used to the notion of big data analysis, along comes a tool that doesn’t even need hard numbers to analyse and predict a particular situation.
Sadly, Veriluma – a leader in the emerging art of prescriptive analytics – isn’t offering up this weekend’s winning Lotto numbers.
But its black box IP may be able to predict when and where the next terrorist attack is likely to happen, or the likelihood of North Korea firing off a ballistic missile that actually works.
In essence, says Veriluma chief Liz Whitelock, prescriptive analytics combines number crunching with gut feeling based on ‘softer’ inputs.
Or in a more Donald Rumsfeld-esque vein, “it takes known factors and associated unknown factors and applies an algorithmic framework to reach conclusions about a stated hypothesis.’
Veriluma, which listed last September via the shell of Parmelia Resources, is doing hard-core but secret squirrel work for local and US defence and national security agencies.
That’s not surprising, because the IP evolved out of the old Commonwealth Research Centre and has been refined by the Department of Defence Intelligence Organisation for war games and scenario modelling.
Veriluma’s most likely revenue source is from a Department of Defence intelligence project involving up to 1000 staff.
We can’t say too much.
Come to think of it, we don’t know too much.
In the US, Veriluma has anti money laundering and counter-terrorism and has forged a link with ex-gumshoe John Casara, an expert in both these fields.
In business circles, Veriluma has been used to assess the chance of an acquisition based not just on financial but ‘soft’ aspects such as culture and reputation.
Peer-to-peer lender MarketLend uses Veriluma’s analytics to assess credit risk not just on the usual measures such as the borrower’s age and income, but inputs such as the Reserve Bank’s economic commentary.
New Criterion is most intrigued by Veriluma’s pending launch of Legal Logix, an app-based tool for divorcing couples to assess the quantum and likely success of a settlement.
“It creates a brief around your situation you can take into a courtroom or to your lawyer,’’ she says.
Whitelock says 37% of aspiring divorcees represent themselves. With 50,000 divorces annually, that makes about 18,000 people who have a fool for their client.
In theory, Legal Logix has the potential to replace lawyers and their fat hourly fees, but in reality the robotic tool is likely to compliment their offerings or allow them to take on more cases.
Veriluma has also attracted the attention of Gilbert + Tobin, which is trialling the software as a way to provide complex corporate advice earlier. The company expects to know this quarter whether the trial will lead to ongoing revenue.
“The goal of the trial is to take one scenario and distil it into something they can use again and again,’’ Whitelock says.
“Some lawyers will find it difficult to concede their hourly rate will be diminished but the reality is the world is moving this way.”
With the divorce app costing up to $250 for the user, it’s not going to move the revenue dial in the short term.
Management envisages that government bodies or large companies will pay subscription fees to a cloud-based platform, perhaps with an annual licence fee.
Veriluma’s shares March quarter statement recorded nil revenue, operating outflows of $585,000 and cash of $810,000.
While the company will bank $500,000 by selling a residual mining tenement, we don’t need prescriptive analytics to know the company will need to raise capital at some stage.
The New Criterion is authored by Tim Boreham.
Many readers will remember Boreham as author of the Criterion column in The Australian newspaper, for well over a decade. He also has more than three decades' experience of business reporting across three major publications.
Tim Boreham has now joined Independent Investment Research and is proud to present The New Criterion, which will honour the style and purpose of the old column. These were based on covering largely ignored small to mid cap stocks in an accessible and entertaining manner for both retail and professional investors.
Disclaimer: The author nor Independent Investment Research have received a fee or any kind of inducement for this article. The New Criterion is not intended as specific investment advice and readers should contact a licensed financial adviser.