VMO successfully closes equity crowdfunding campaign
By Anushia Kandasivam May 4, 2017
- Kickstarts phase one of market expansion
- Equity crowdfunding seeing greater take-up in Malaysia
MALAYSIAN instant booking platform VMO Rocks Sdn Bhd raised a total of RM500,000 (US$115,535) via an equity crowdfunding campaign and a co-investment deal.
VMO raised RM250,000 through equity crowdfunding platform CrowdPlus.asia over four days. Another RM250,000 was raised from a co-investment deal with Cradle Fund Sdn Bhd.
Founder Vincent Kok, who is VMO’s chief event-gelist says that successfully closing the crowdfunding in four days surprised VMO because no pre-marketing was done except for a few posts on Facebook.
CrowdPlus.asia is a venture-backed equity crowdfunding platform, which means, explains chief executive officer Andrew Tan, issuers are able to leverage on its resources, network and knowledge to drive key performance indicators and to scale.
“We are confident that this is a bankable deal because VMO is solving a real problem in the market. We think VMO is going to be a huge Southeast Asian player,” he says, adding that VMO’s will benefit greatly from Cradle’s support and network as well.
VMO, a platform that allows users to book event venues and services instantly, was launched in March last year aiming to revolutionise the way people discover, compare and book event spaces. It secured an undisclosed amount of investment from regional food and beverage owner and operator Rhombus Connexion Sdn Bhd (formerly Rhombus Food Holdings) in September last year.
Kok ideated VMO when he had trouble finding and booking suitable venues for meetings in Kuala Lumpur. “VMO was built to solve a problem. It was a real problem for us. I thought ‘how can we book a hotel in London so easily but not book a room here for a meeting’.”
VMO was launched in 2014 and has since gone through several iterations and modifications: at first users could search and find venues and click to get a quote, then the platform evolved to allow bookings, menus were added so that users can choose a menu when they book, and now there are add-on services, such as ordering a cake or booking a decorator, that can be obtained along with the venue.
The platform has grown significantly over the last year, doubling its listings between March and December last year to 800; there were 916 listings as at the end of April 2017.
The total value of bookings on VMO increased by almost RM1 million (US$1 = RM4.32) between 2015 and 2016 - RM223,303 to RM1,194, 081.
VMO takes 10% of each booking. Kok points out that the final quarter of the year is usually when most of the year’s revenue comes in as that is when most events take place. “The final quarter of 2016 was a bumper quarter; almost half of last year’s revenue was made in the final quarter and we think this trend is going to continue year-on-year.”
An average booking on VMO between May 2015 and December 2016 was RM4,989, which increased to RM8,450 in the month of December last year. The enquiries to bookings ratio improved from less than 1% in 2014 when VMO first launched to 7.9% now.
Andre Shum, owner of Rama V, which brings in a large amount of booking value for VMO, says that the platform has certainly provided the restaurant extra revenue.
“With a 15% increase in revenue for us, joining VMO is no skin off our nose. The 10% commission that VMO gets is worth it because the platform brings us significant revenue,” says Shum, who is also co-founder and lead partner at Rhombus Connexion.
Kok (pic, right) reveals that VMO’s equity crowdfunding route was the result of a chance meeting with former CrowdPlus.asia CEO Brian Chung who convinced the former to try it and to do it in Malaysia.
“At that point CrowdPlus had already closed several successful campaigns, which gave us the confidence to go with them,” he says.
“Equity crowdfunding gives you a platform for market validation, where you can attract your users who will act as a focus group of people willing to put their money into you,” says Tan.
Speaking about the benefits of equity crowdfunding, Tan says that besides attracting supporters and providing a network of mentors, it provides the issuer brand awareness and a huge pool of investors that not only assist monetarily but also in terms of expertise.
“We also assist you with valuation, working on a certain framework that will give you a reasonable valuation. This will give you good credentials for your next round.”
Though Malaysia is the first country in the Asean region put in place a regulated framework for equity crowdfunding, Tan says that this method of funding is not well known. Last year, a total of RM10 million was raised through equity crowdfunding, a number some experts said was not very high.
According to Tan, the equity crowdfunding space is experiencing growth, and though it may not show much more maturity this year due to low investor liquidity, he expects next year to be more exciting.
The funding that VMO obtained will be used for expansion. According to Kok, the RM500,000 was raised for the purpose of advancing VMO beyond its current features and ready the startup for scalability.
VMO’s three-year plan involves making all its listings fully bookable online, meaning users will be able to book every event space along with their choice of menu directly on the platform. Currently, about 30% of listings are bookable on the platform.
Other than that, VMO will add more services so that users can get more value-added services.
More immediately, the monies will be used for market expansion (50%), advertising (20%) and technology development (30%).
Market expansion means taking VMO beyond the Klang Valley, specifically to the southern cities of Malacca and Johor Bahru, the latter being the closest Malaysian city to Singapore.
“Johor Bahru is going to be interesting because we will be able to attract Singaporeans, especially with their strong currency, which puts Malaysian event spaces at a significant advantage,” says Kok.
Kok explains that VMO initial foray overseas will be through Johor Baru; actually setting foot in Singapore and Thailand is in the plans but will happen after the next funding round. Tan adds that working with Rhombus will provide VMO good exposure throughout Southeast Asia, as the f&b giant is already present in many countries.
However, Kok says that the questions VMO is asking itself at this point is “Are we ready to expand overseas?
“Expanding overseas will involve us learning the ropes and the market in a different language and culture. Meanwhile, Malaysia has more than 30,000 f&b outlets plus event and meeting spaces. We’re really just scratching the surface here. Malaysia as a single market is big.”
He adds that VMO is working hard to get deeper into the domestic market by improving conversion numbers and increasing listings. With the expansion, VMO is aiming for 1,500 listings on the platform by the end of this year.