The Far East High Technology Fund will invest RUB 190 mln in MultiKubik, a manufacturer of Cinemood projectors. The company has attracted an investor with a Far Eastern profile as part of the preparations for entry in the Asian markets.
The Far East High Technology Fund (established in August 2018 by the Far East Development Fund, Rusnano and Russian Venture Company) will invest RUB 190 mln in MultiKubik LLC, RBC was told by Ruslan Sarkisov, CEO of the Far East High Technology Fund, which was later confirmed by a company representative.
What Is MultiKubik?
MultiKubik’s core products are cube-shaped 8x8cm mobile movie theatres under Cinemood brand. The cube projector was invented by Mikhail Bukhovtsev when he served as a sales director in a department of Chinese corporation Huawei. He is a co-owner of MultiKubik now.
The business idea relied on the growing popularity of mobile projectors: 10,000 devices were sold in Russia every year. In 2014, the businessman launched his own solution and raised his first investments by crowdfunding. The same year, he obtained a licence to Soyuzmultfilm products, and the company made partnerships with MegaFon.TV, children’s TV channel Mult, and online video platform ivi.
In 2017, the company attracted professional investors: the Internet Initiatives Development Fund (IIDF) invested RUB 150 mln in exchange for an interest of about 28% in the company’s capital. In December 2018, MultiKubik raised another RUB 263 mln from RBF Ventures investment fund, the IIDF, and business angels, including Fedor Zakharov, CEO of Arktika (thermos manufacturer), and Pavel Roytberg, former CCO of NTV-Plus. “The company does a good job capitalising the investments that it raises. In particular, sales in the US rose seven times and doubled in Russia in 2019,” RBC was told by Mikhail Fedotov, Managing Partner of RBF Ventures. RBF representatives stress that MultiKubik is a “company that has international ambitions”: its engines are used “by dozens of thousand families” across the world, including in the US and Canada. “The project team has designed a viable business model making it possible both to reduce the costs and develop a family of high-potential engines and services in the Kids Assistance category, the Fund representatives claim. The project is characterised by sustainable financial behaviour: over six months of 2019, MultiKubik’s revenue increased by over 2.5 times year-on-year.”
Operation of Cinemood is based on the film-strip projector principle. The mini projector is equipped with a cloud platform with pre-installed content and offers access to popular video engines (ivi, Netflix, Amazon Prime Video, Soyuzmultfilm, MegaFon.TV) and online store. Besides, MultiKubik offers its customers to purchase smart accessories for the cube — multi-coloured silicon cases provided with an NFC tag. Once the case connects to the cube projector, it uploads additional content to the device. For instance, the Smeshariki case opens access to more episodes of the animated series.
The primary consumers of mini projectors are families with kids aged from two to nine. The company refers to Russia and the US as to its primary markets, as MultiKubik has sales offices there; in addition, it operates in the markets of the CIS and Canada. In 2018, the US accounted for 20% of the devices sold by the company, and in 1H 2019 — for 30% (according to the data provided by the company).
The company does not disclose the expenditure data. On the average, the price of a Cinemood projector varies from RUB 25,000 to RUB 35,000. According to the data provided by the company, the company has already sold 35 devices worldwide in 1H 2019. According to SPARK, the revenue of MultiKubik LLC amounted to RUB 188 mln in 2017.
What Are the Prospects of the Project?
“Involvement of the Fund that focuses on the Far East provides the company with new opportunities in Asia where the sales are currently prepared to be launched in 2020-2021,” said Pavel Zhuravlev, Director of the Investment Office at MultiKubik. “In addition, we will launch a new investment-raising round shortly in order to maintain rapid growth prioritised by the company and its shareholders.”
The company representatives claim that MultiKubik has already launched the development of its business in the Indian and Chinese markets; besides, certain partners from China (that have not been specified) have offered to open a joint venture.
The company is planning to open an office and R&D centre in Vladivostok that will be responsible for upgrading the features of the content platform and new projector models and proceed with the research and development effort in VR/AR technology. Furthermore, location in the Far East will entitle the company to preferences under such programmes as Advanced Special Economic Zone (an economic zone with preferential tax treatment and simplified administrative procedures intended to boost economic development) and Free Port of Vladivostok (an area with special customs, tax, investment and related regulation). The company representatives hope that the preferences will make it possible to reduce future release costs of new products and expand to the Asian markets.