Building a Suite of Online Retail Services to the Russian-Speaking Market
This profile is part of a paid investor education campaign.*
GoverMedia Plus Canada Corp. (CSE:MPLS) is a technology company which has developed a comprehensive internet platform dedicated to addressing the needs of businesses and retailers in the Russian-speaking markets. Working out of its wholly-owned Russian subsidiary, GoverMedia Plus LLC, the company’s team has designed a variety of online services including e-commerce, social media, multimedia, crowdfunding, corporate databases and messaging platforms with the goal of bringing together Russian-speaking individuals across the world within a unique online ecosystem.
Acquired in 2017, GoverMedia Plus LLC is located in the Russian Federation city of Kazan, considered to be one of the two tech hubs in the country. Being located south-east of Moscow, Kazan offers both significant opportunities for cost savings as well as access to a qualified labor pool of software and IT specialists.
The Russian-speaking population is made up of approximately 260 million people, with an internet penetration of approximately 60 percent, accounting for one of Europe’s largest internet markets. Likewise, both online media consumption and digital retail have been on the rise in Russia, with digital buyers growing in numbers from 39 million in 2015 to 46 million in 2017 and expected to reach almost 60 million by 2021. This has occurred in parallel to an increase in Russia’s GDP per capita from $3,485 in 1990 to $8,748 in 2016.
Despite the size and growth potential of the Russian-speaking digital market, this particular area of the world has perpetually lagged in comparison to the developments in the ‘Western World’. According to GoverMedia CEO Roland J. Bopp, Eastern Europe, the market penetration with a new technology experience usually 10 to 15 years delay compared to Western Europe/ North America. To counter this effect, Russia is starting to channel government investment into improving internet access across the country, growing the market potential for digital retail.
Currently, due to the state of the market, there are only a small number of companies operating as social media platforms for the Russian-speaking community. These compete with global internet and technology companies like Aliexpress, Facebook and Instagram, which have found it difficult to properly penetrate this cultural audience. With the help of a strong management team, the location of its subsidiary and strong relationships with businesses, banks and government entities, GoverMedia brings a more in-depth understanding of the cultural landscape and of how to increase the appeal of retail technology solutions in the Russian-speaking community, such as adding cryptocurrency transaction solutions to their platform and providing their users with access to EXMO’s cryptocurrency exchange.
GoverMedia is led by a management team with significant experience across various industries, including telecommunications, technology, corporate development and finance. The management team includes CEO Roland J. Bopp, who brings almost 25 years of experience building and managing small to large-sized companies in the telecommunications sphere. His roles included being chairman and CEO of Deutsche Telekom Inc, as well as Managing Director of Mannesmann, Dusseldorf, a US$20 billion telecommunications and engineering firm.
The team is also complemented by founder Leonid Afanasyev, who has 20 years in the financial sector. His experience includes a term with Morgan Stanley and he is currently managing an asset management firm in Switzerland. Having worked in multiple jurisdictions, Afanasyev also provides insight into both Western and Russian cultures.
- Developed internet platform with suite of B2B, B2C and retail solutions
- Significant market potential as Russian-speaking digital buyers have grown from 39 million in 2015 to 46 million in 2017
- IPO raised gross proceeds of $1.77 million, contributing to a total of $3.3 million in financing
- Partnered with EXMO, one of the largest cryptocurrency exchanges, to provide its users with access to the cryptocurrency markets.
- Tightly-held share structure with fewer than 45 million shares outstanding
- Management team with vast experience across numerous industries including telecommunications, finance and technology.
The GoverMedia Ecosystem
GoverMedia’s vision is to become a leading internet platform and e-commerce company, and they have started by targeting one of the largest internet user bases in Europe. One of the key features of the GoverMedia platform is that it provides access to a number of services under one sole account. The platform gives Russian-speaking users across Eastern Europe and the rest of the world the chance to interact, conduct business transactions, crowdfunding and develop a social media presence within a highly encrypted and secure platform. GoverMedia, through their partnership with cryptocurrency exchange EXMO, have integrated their technology systems to allow GoverMedia platform users to accept and process cryptocurrency transaction for Bitcoin, Etherium and FIAT currencies.
As Russia and the regions that share its language are in the midst of uncovering alternatives to traditional media advertising, internet advertising has grown steadily at a rate of 21 percent per year since 2011. As such, one of the offerings for GoverMedia’s corporate clients will be digital marketing within their platform. This will provide corporations with the opportunity to market and advertise directly to the platform’s growing user base. GoverMedia will offer a selection of digital advertising packages, allowing its customers to choose from various features.
Taking advantage of a notable expansion in mobile usage and online payments in Eastern Europe, GoverMedia’s E-commerce platform will offer users the possibility to buy and/or sell any item or service. As a comprehensive internet platform, GoverMedia connects users with a vast network of service providers. In facilitating these connections, the company has established strong relationships with a number of local businesses.
For this business stream, the company’s revenue model is centered around charging a small percentage of every transaction that takes place on the platform. This final percentage is still to be determined and is expected to change depending on market conditions.
GoverMedia has also developed a crowdfunding platform that allows for organizations to raise financing for business or humanitarian efforts. In order to help the client organizations succeed, GoverMedia offers access to a team of analysts that provide support during due diligence and financing assessments. As part of their offering, this team will conduct a thorough analysis of the company’s financial profile, management and history. This will be followed by a publication of this analysis, providing insight to potential investors.
As part of their platform offering, GoverMedia has a subscription model that it offers to corporate users. By subscribing, companies obtain access to the full suite of platform features. This includes access to a larger retail user base, social media functionalities, crowdfunding tools, a messaging platform, corporate database and other useful components.
MFLY+ Messaging Platform
GoverMedia has developed a proprietary messaging platform named MFLY+ messenger. The platform was designed as a B2B and B2C tool for businesses that make use of the GoverMedia platform. Communication on MFLY+ messenger is covered under end-to-end encryption, and the application provides the option to sign legal documents with digital signatures. MFLY+ messenger has the added functionality of allowing users to send, split and transact bitcoin.
The messaging platform has been approved for download through both the Apple and Android stores.
Search Engine and Corporate Database
Across the messaging platform, users will be able to search for professionals based on their name, employment, location, age, company and more. This search functionality will also allow companies to search for other organizations using additional search parameters like operational, legal, corporate or financial information. The corporate search will act as a revenue stream for GoverMedia, as the company will be able to apply flat rate pricing to search reports generated for each client.
GoverMedia’s internet platform will give its retail users the ability to create social media profiles akin to those on Facebook and LinkedIn. Using these profiles, companies can post content, interact with other users, and more.
Deploying Revenue Streams
Moving forward, the company is focused on generating revenue from e-commerce transactions, advertisement and subscription (enterprise only). Considering the rapid development of its online ecosystem and constant user engagement growth, the company will generate its first revenues in second half of 2018. As it takes this step, management believes a high CAGR, at the range of 80 percent to 100 percent, would reflect the scalability and attractiveness of its business model.
Partnerships and Agreements
Chamber of Commerce and Industry of Riga, Latvia and Kazan Federal University and Higher School of Internet Technology Partnerships
In June 2018, GoverMedia signed a partnership agreement with the Chamber of Commerce and Industry of Riga, Latvia to support small and medium sized businesses. The agreement will focus on creating a system that will determine the reliability of partners and/or participants in international contracts. As part of this agreement, GoverMedia also signed a cooperative agreement with the Kazan Federal University and Higher School of Internet Technology and will become a partner with the school’s Department of Digital Analytics and Infrastructure to help with the reliability of system being developed. The agreement with Kazan’s Federal University gives GoverMedia access to highly qualified engineers, programmers, researchers and software developers.
In 2017, Latvia had a population of approximately two million people and a GDP of approximately US$55 billion. Latvia joined the European Union (EU) in 2004 and integrated the EURO zone in 2014. The partnership with Riga’s Chamber of Commerce gives GoverMedia access to the business community in Riga, to facilitate cross-border transactions between the Latvia and Russia. Russia is Latvia’s largest trade partner and GoverMedia hopes to become the online marketplace of choice for Latvian businesses to enter the Russian-speaking markets. Additionally, the partnership with Latvia allows GoverMedia to enter the EU.
EXMO Finance LLP Partnership
In June 2018, GoverMedia also signed a commercial partnership agreement with EXMO Finance LLP, one of the largest cryptocurrency exchanges in Europe. EXMO sees approximately US$40 million in trading volume each day. GoverMedia will open a corporate account on the EXMO exchange in order to provide its users with the ability to trade cryptocurrencies on the GoverMedia online ecosystem through a facilitated process.
EXMO and GoverMedia will integrate their technology infrastructures through an open API. Afterwards, GoverMedia’s users will be able to access their online crypto-trading accounts and actively trade cryptocurrencies at any time without having to leave the platform. The partnership also provides GoverMedia the chance to secure more users from EXMO, whose user base spans more than 200 countries and has over 1.4 million active users.
In addition to the partnership, GoverMedia has entered into a separate profit-sharing agreement with EXMO where every proceed generated by crypto-trading by GoverMedia users will be split between the two companies.
Swiss Bank Agreement
In July 2018, GoverMedia signed a software development agreement with a private Swiss bank in Geneva to develop a white labeled messaging service platform for the bank’s internal communications. The messaging service is fully customized and can be replicated at other banking institutions. The technology will be based on GoverMedia’s MPLY+ messaging software.
Roland J. Bopp—CEO and Director
Roland J. Bopp has broad senior global corporate and operating experience in premier telecom, software and technology service organizations. During his career he was the Chairman, President & CEO of the Americas for Deutsche Telekom Inc., New York,
subsidiary of Deutsche Telekom, Germany, Europe’s largest telecommunication service company, responsible for all of Deutsche Telekom activities in North and South America, including the alliance with France Telecom and Sprint. He was as well a Managing Director of Mannesmann Corp., Dusseldorf, Germany, a US$20 billion telecommunication and engineering company operating worldwide and publicly traded.
Leonid Afanasyev—Founder and Director
Leonid Afanasyev is one of the founding members of GoverMedia Plus in Russia. He founded and is the Managing Director of Crown Capital Group SA, a Swiss based asset management company that was established in 2007. He was also the Executive VP at Dukre Asset Management SA in Switzerland. Prior to that he was an investment advisor with Morgan Stanley and Prudential Securities Corp, where he worked at the institutional desk for US equities and was involved in IPO transactions of major US companies such as Ralph Loren, Visa, NVIDIA, Scechers. In addition, he established a payment processing company called Skytec and entered into a JV with WireCard AG, Munich, Germany
David Lane has over 25 years’ experience as a start-up specialist with a keen eye for strategic direction and raising capital. He has ample experience in senior management positions across multiple industries including Oil and Gas, Major Sports, Financial Services and Health Pharmaceutical. He most recently was President & CEO of Quikflo Health Inc. which eventually became Friday Night Inc. Prior to Quikflo, he was President & CEO of M-Pharmaceutical which focused on a biomedical device for self-monitoring of glucose levels as it related to Diabetes. He was also the Head of Operations and Marketing for Great Northern Oil Sands, a NASDAQ traded company focused on Canadian oil production.
Dr. Roland Klose—Advisory Board Member
Dr. Roland Klose holds a PhD in business administration from the University of Wuerzburg, Germany. He is a Professor for Strategic Management and Internationalization at the FOM, University for Applied Sciences, Essen and one of the speakers of DSW and Euroshareholders, whereby he has developed an extensive network in the industry. He serves as supervisory board member at the Berentzen Group AG and served as member of the advisory board at the DIPS, German Institute for Portfolio Strategy, Essen. He also served on the German Asia-Pacific Board, as well as the German-Design Council and is a fellow of the Baden-Baden entrepreneur’s network. He is currently a partner of Jomec Group and responsible for the Group’s M&A business in the Germany with a focus on transactions between China and Germany.
JJ Sendelbach—Advisory Board Member
JJ Sendelbach has broad senior corporate and consulting experience in financial services, information technology and start-ups. He is Founder & Managing Director of Doublejay Consulting (DJC), a boutique advisory firm to the consulting and technology industry, helping its clients with strategic and inorganic growth initiatives. He currently serves on the advisory board of 7 disruptive technology start-ups in the artificial intelligence and advanced analytics space in the US and Europe. Prior to founding DJC in 2003, he was a partner at Droege & Company, New York, the COO of Westdeutsche Landesbank, New York, Managing Director of the Shared Services unit of Deutsche Bank North America, and Senior Vice President of Deutsche Capital Markets, Japan.
Kai Lauterjung—Advisory Board Member
Kai Lauterjung has a broad entrepreneurial and leadership experience in the high-technology and telecommunications sectors. He has been very active in start-up build-ups, VC financings, M&A transactions and global expansions. He started his career at ANT Nachrichtentechnik as Head of Sales and transitioned into Romantis GmbH as Managing Director of Sales and Marketing. During the following years, he acted as CEO of Plenexis Holding GmbH and Managing Director of ND SatCom Managed Networks GmbH. He subsequently founded Romantis Group in Moscow and TK Energy GmbH in Germany. He benefits from a global network and experience, notably in Russia, USA, Turkey, etc.
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