While Facebook measures its penetration against nothing less than Earth’s population, anything else can seem small. Your site allows gamers to stream their latest moves to their peers? Niche. Your app lets people listen to their music for a flat fee? Niche. Your service lets people order food through their smartphone? So niche.
But these ideas, namely Twitch, Spotify and Grubhub, aren’t niche at all. They all attract millions upon millions of users and they get paid. So the idea that every venture that isn’t Facebook-scaled isn’t worthwhile has become nonsense.
It’s in this spirit that a new company called GoverMedia Plus (CSE:MPLS) was founded. GoverMedia isn’t trying to be everything to everybody. The company is, in fact, solely concerned with tackling the Russian ecommerce space, which is currently woefully underserved. The company is currently growing its user base rapidly and hopes to the leading all-encompassing online e-commerce platform in the Russian speaking region.
Cantech Letter talked to CEO Roland Bopp about the past, present and future of GoverMedia Plus.
Roland, GoverMedia Plus Canada just completed its IPO to list on the CSE. Can you tell us a bit about the history of the company?
Yes, with pleasure. GoverMedia Plus Canada Corp is a Canadian company founded in 2017. We recently listed GoverMedia Plus on the Canadian Securities Exchange and the shares trade with the symbol MPLS. We raised approximately $2.77mm Canadian dollars on a long form prospectus offering led by Mackie Research. You can find more information including the management team and advisory board on our corporate website at www.gm.plus
MPLS has a fully owed Russian subsidiary. Based in Kazan, Russia, our team of 30 employees have developed a state of the art internet platform over the last 3 years. This platform offers e-commerce, social media, corporate auctions, crowd funding and additional features for the Russian speaking online markets. The platform is fully operational and can be accessed online at www.govermedia.plus
GoverMedia Plus Canada is a holding company for a Russian tech subsidiary. Can you explain the full structure of the company?
Of course. The Canadian holding company has a 100% owned Russian technology subsidiary, based in Kazan, Russia.
Why did GoverMedia decide to list in Canada?
Canada was a natural choice for us to list. The Canadian capital markets have been very friendly towards technology companies. Many blockchain and crypto-currency companies have listed in Canada in the last year. There is a strong demand for high growth technology opportunities. The CSE is a great exchange for young, high-growth companies such as ours. The Canadian markets are well regarded internationally, and we believe they provide the ideal venue for our transition to be a publicly traded company.
The current internet penetration rate in the Russian federation reminds me of the wireless penetration rate in the country back in early 2000. At the time I was involved in Megafon, Russia and we saw a tremendous opportunity in the Russian wireless market, as the penetration rate was far behind compared to its western peers…
Can you tell us more about the GoverMedia platform? How will the company make money?
We have many different product offerings and services. Up until this point, we have been focused on building out our user base and building brand awareness for the platform in the Russian speaking regions. Govermedia has just achieved a major milestone. We recently passed over 100,000 registered active users on our platform. Engagement is excellent with many thousand users logged into the platform at any given time. In addition, the average time spent online is over 10 minutes. Now that we have passed our first 100,000 users, we plan to start monetizing the platform. We have begun to start charging for services on the platform and we expect revenues to scale up in the second half of 2018.
What kind of revenue mix to you expect from the six business lines?
Being an internet, e-commerce company, we expect the main revenue channels to be E-Commerce fees, Advertisement and Subscriptions. We are projecting these revenue streams to account for 75% of our future revenues for the next 5-year horizon. Additional product offerings we have include Crowdfunding (fixed percentage fee on every successful fundraising campaign), Corporate Auctions (fixed percentage fee on every successful auction transaction) and Corporate Search Report (flat fee for every report generated through our internal corporate database).
How big is the global Russian internet community?
Out of a population of 146 million, 60% of those are active internet users, i.e. 87.5 million. In 2017, there have been 245,2 million connections, 67 million social media accounts opened and more than 150,000 online shops going online per year. The Russian Advertisement market has constantly grown the past 7 years to reach $21.6 billion in 2017 from $8 billion in 2020. The current internet penetration rate in the Russian federation reminds me of the wireless penetration rate in the country back in early 2000. At the time I was involved in Megafon, Russia and we saw a tremendous opportunity in the Russian wireless market, as the penetration rate was far behind compared to its western peers. I am confident the same growth pattern will be replicated in the online markets in the next 5-10 years.
The Russian online market is vastly underserved. Facebook and other major global online platforms have little or no presence in the Russian Federation. At the same time, internet penetration is lower than Western European peers and growing rapidly, and the young population craves for all the online offerings their Western counter-parts take for granted…
How engaged do you expect users will be with the GoverMedia Plus Canada website?
Our Canadian corporate website is just for information purposes for the Canadian publicly traded company. Interested people can go to www.gm.plus. On that site, there is a link to the Russian Govermedia internet platform which can be accessed at www.govermedia.plus. This is the main platform for user interaction. Our user base is rapidly growing. User engagement is on the rise. We are over 100,000 users on the platform with more than 10,000 unique daily visits.
How do you plan to build awareness of the company’s offerings? Will this require a big marketing budget?
Our team in Kazan is comprised of some of the best online digital marketing experts in Russia. We plan to deploy a large majority of the capital raised on our IPO towards our marketing efforts. Our internal goal is to have 1 million registered users on the platform by the end of 2018. We feel this will be a key milestone and give us critical mass in the Russian speaking markets. We are extremely pleased with our initial marketing efforts and how the growth in the user base and return on investment of our initial marketing budgets has exceeded our expectations.
Is this an underserved market?
Absolutely. The Russian online market is vastly underserved. Facebook and other major global online platforms have little or no presence in the Russian Federation. At the same time, internet penetration is lower than Western European peers and growing rapidly, and the young population craves for all the online offerings their Western counter-parts take for granted. We believe this a huge untapped opportunity for us and it will drive strong future growth.
Can you tell us a bit about your management team?
Of course. I have a strong international background in global telecommunications and high growth industries. I am a senior German business management executive. I was the former President and CEO of Deutsche Telecom North America and led the company during the high growth days of the wireless industry. Before that, I was Executive Vice President of Mannesmann and executed the wireless market strategy across Europe, which led to the acquisition of Mannesmann from Vodafone.
If I can dream, we would like to think we have the opportunity to become the Alibaba of Russia. Alibaba has been a huge success story and shows the potential of an all encompassing online platform…
I have put together a very senior Advisory Board comprised of experience German business professionals to help me manage the incredible growth we believe the company will be capable of. In fact, there are direct similarities to my former career. I believe the online e-commerce market in the Russian speaking regions is undergoing a rapid growth phase – very similar to the mobile phone subscriber growth in Europe and North America in the 1990’s. We believe we are perfectly positioned at Govermedia. We have an experience senior western management team overseeing some of the smartest and best Russian programmers and marketers in our Russian subsidiary.
Is there an existing company you would compare GoverMedia Plus Canada to?
If I can dream, we would like to think we have the opportunity to become the Alibaba of Russia. Alibaba has been a huge success story and shows the potential of an all encompassing online platform. As the Russian global speaking markets are around one tenth the size of the Chinese markets, we see the opportunity of growing our user base, revenues and market capitalization in the future to a very attractive level. Our platform has many features that incorporate the social media of a Facebook, online e-commerce capabilities of Amazon, auction functions of eBay, and proprietary messenger of WhatsApp or Telegram. Our technical team is constantly improving and adding new products and services for maximum user engagement.
What do you expect to accomplish in the next 12 months?
Our primary goal is to grow our user base and transition Govermedia from a proof of concept to the leading all-encompassing online e-commerce platform in the Russian speaking region. We have several exciting new initiatives in the pipeline and I would encourage all of your readers to continue to follow our developments closely. You can go to our website at www.gm.plus and register to receive our press releases. It is an exciting time for our company and will look forward to giving you future updates as we execute on our business plans and grow out our user base.
Disclosure: GoverMedia is an annual sponsor of Cantech Letter