The harsh reality of raising $2.5 million
When StartupSmart spoke to Explore Engage ahead of the 2012 StartupSmart Awards, where it was named Best Services Start-up, it highlighted its intention to go global.
So, nearly a year on, has it achieved what it set out to do?
Explore Engage is acknowledged as a world leader in augmented reality (AR) creative services and AR eyewear, serving a wide range of clients, from start-ups to royal families.
The company defines AR as real-time animation superimposed on each user’s real-time view of the world, usually imposed through a camera device.
The Sydney-based business was founded in 2010 by Luke Crane, Paul Kouppas and Scott O’Brien.
Revenue in the 2010/11 financial year was $1.2 million. In 2012, revenue was $2.9 million. But to grow further, the start-up needs investment cash – specifically, $2.5 million.
“We have been expanding in the sense we’ve been doing a lot of projects for overseas clients. We just finished a big project for Universal Studios in Los Angeles,” Crane says.
“We just built an augmented reality application for their theme park. They’ve got a big ride over there called Transformers 3D.”
“We’ve been doing a lot of briefs in the UK and America, and we’ve set up a subsidiary in the Middle East, in Qatar in particular.”
“[That subsidiary is] selling the services for augmented reality over there, focusing on mining and oil and gas, and infrastructure for safety and training. It’s slowly but surely happening.”
While the move into the Middle East was a wise one, Crane admits it was tough.
“We have two people in the Middle East, from a sales and marketing perspective… One is a German man but he has lived there for years, and the other one is from Jordan,” he says.
“They invested in our company as well… Part of the investment was they would try and set up a subsidiary in the area.
“Setting up operations there is extremely difficult. Everything takes an extreme amount of time to do. It’s very, very slow over there compared to here.
“It takes a year or so for something that would be a lot quicker here – a month or so. Just to set up a business there is a lot more complicated.”
But with 27 projects on the go, Crane says his team – which consists of around 14 people – is the busiest it has ever been.
The biggest challenge in the last year has been managing cashflow, he says.
“The biggest learning curve was to manage expectations and not get ahead of yourself, and have that cashflow planned out a few months [in advance] – being prepared for that,” he says.
“We’re in a position where it’s been making sure we have enough projects on or managing cashflow, so we can swallow that downtime.
“Things are going good but we’re still searching for investment… We’re seeking $2.5 million, from everywhere basically.”
“Getting finance has been extremely difficult. We’re meeting some really interesting potential investors at the moment, but it seems to be a lot to ask here in Australia.”
“We’re only asking for $2.5 million, which isn’t a lot of money, but it seems to be in Australia. We need to start looking overseas. We’re sitting on something with huge potential. We have just got to act on it.”
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