By Lisa Walls-Hester on 7th October 2016
Graphic design platforms have experienced huge growth and VC’s are falling over themselves to back startups with potential. The platforms that make it easy for anyone to create their own websites, presentations or videos are thriving on the back of the social media boom.
Australian startup Canva, has just raised another $15m in funding, bringing its value, according to Business Insider, to an estimated $345m today, double it’s $165m valuation in late 2015. The company which provides web and print graphic design software only launched four years ago. The speed of its expansion around the globe shows a clear demand for the technology that brings graphic design tools and tricks to the everyday consumer.
Canva, now claims to have over 12 million users and CEO, Melanie Perkins, says she has plans for further expansion. “Having a lot of capital ready to go makes it possible for us to quadruple down; there are core pillars of our plans that were in our original pitch deck from 2011 that we still haven’t commenced," she said.
Canva secured investment from Australia’s Blackbird Ventures and Silicon Valley’s Felicis Ventures.
Video creation platforms such as Animoto and Magisto are hoping to reap the same success and do for video what Canva did for content creation.
Earlier this year Magisto received $2m strategic investment from Russian internet giant Mail.ru. As part of the partnership, Magisto also integrated its app with Mail.ru’s Odnoklassniki service, which is sort of like Russia’s Facebook. This brings the total amount of funding raised by Magisto to date to $20.5m.
Animoto has received $30m funding from Spectrum Equity Investors, Madrona Venture Group and Amazon and just this week it announced it is going to target enterprises with a new product. It is launching a new tool for businesses which allows them to produce their own marketing videos without any specialist skills.
It’s hot on the heels of Videolicious, who in July turned its attention from consumer video app to enterprise video customers and got itself $1.5m of new money to push this initiative. This latest round brings its total funding to $6m.
So the VC’s spotlight is firmly focused on this sector and its momentum but is there any opportunity for retail investors?
Rotor Video claims to have a new technology for creating promotional videos and it is currently raising funds on Angels Den.
Rotor is an early stage startup, its site is still in Beta, but it has received backing from Ascension Ventures, Ascension back early stage digital companies in the media and tech sectors. The Rotor Video raise is now open to the crowd with the minimum investment of £500.
Rotor’s product is a cloud-based tool and allows video’s to be produced by anyone in just a few steps, and in fewer than fifteen minutes. Rotor employs algorithms which cut and edit the videos and the platform hosts a selection of stock clips, and visual effects to make the videos compelling.
Finished videos can be viewed for free and then purchased, fees range from £5-35 depending on the quality of video required.
The company has a maximum funding target of £375,000 for 27.28 per cent equity and the company has already funded over £322,000.
Despite its early stage Rotor is already generating some revenue and says it has a conversion rate of around five per cent of users who create videos online and then go on to buy them. It’s focused on increasing its monthly sales revenue to £6,000 per month within six months and forecasts £9m of sales by the end of year three.
The market demand is clear, video is fast becoming the most engaging and most consumed type of content. The propellants for this wave of media are social media, Youtube and Vimeo.
In its 2016 Social Video Forecast, Animoto claims: “77 per cent of professional marketers and small business owners who have tried video marketing, say it has a direct impact on their businesses, and 60 per cent plan to increase their investment in video in the next year.”
Source: Animoto social forecast
“Meanwhile, social networks like Facebook, Instagram, Twitter, Pinterest, and Snapchat have optimized for video in response to the growing consumer appetite for more dynamic, short-form video content. “
While there is a demand for video across all business sectors, some of the most popular being hospitality, real estate, and the fitness industry, Rotor is starting by targeting the music industry. It says “We’ve started with the music industry because music videos are not just being consumed in large numbers (In the US in 2015, music video streams grew by 110 per cent compared to 83 per cent for audio), but they are also hugely social.”
The burning question is can the Rotor team take this company to the same scale as the existing players and then accomplish a successful exit to provide investors with a healthy return?
The key execs have an impressive track record and excellent reputation in their industry. There is a good balance of technical and entrepreneurial experience, but is the team sufficiently incentivised to see the business through to exit?
Rotor states its exit strategy is based around an acquisition and the company says: “We have developed a unique technology that is acquirable as it stands. Two of our developers have built technology acquired by Google and YouTube in the past and have three patents under their belt. We are now looking to raise the value of our tech and will attract acquirers such as YouTube, Adobe, Spotify, and Facebook. We have a powerful video content creation tool that answers demands in the current environment.”