Acquisition deals in which startups from Eastern Europe take over American peers are rare. It is even more interesting when it happens in the media and entertainment sector. The sports media scale-up Flipps Media, which was founded in Bulgaria, has announced exactly such deal with the US machine learning company Avid AI earlier this month. “The acquisition is in a cash and stock transaction. Given the dynamic competitive environment we’ve decided not to announce the exact parameters of the deal”, Kostadin Yordanov, co-founder and CEO of Flipps, told Trending Topics.
The main product of Flipps is the digital streaming network FITE, which provides combat sports fans with the opportunity to watch events and engage with each other. FITE also helps programmers to better distribute and monetize their content. Avid AI, on the other hand, applies machine learning to provide sports community with personalized social experience. As the two companies join forces FITE is about to become the one stop shop for combat sports fans to get information and interact with peers. At the end of the day, not only the video itself is what makes the user come back, but the way the user finds and experiences the content, Yordanov explained.
When a piranha eats the shark
Yordanov sold his first internet venture to the Stockholm Stock Exchange listed Framfab back in the late 1990s. He stayed in the company and started developing a R&D center in Bulgaria to work for clients such as Volvo, Whirlpool and Bosch. As the dotcom bubble burst Yordanov and the team bought back their company and started all over again under an new brand – Bianor. Several years Bianor lived upon outsourcing projects primarily for US clients. Flipps, where Bianor still holds 18%, was started in 2012 as afterwork experiment of the tech team. At first the product only had the capability to transfer images from iPhone 3G to Playstation and nobody considered it as a project with any business logic behind the tech. Later on, Yordanov and the team, saw the opportunity to use the same technology for video transfer.
Back in the days the company was focused on general media content and its distribution via mobile technologies. Flipps was a mobile app for streaming all types of content – from news to series, and it was going quite well with up to 350 thousands organic downloads per month, primarily on the US market. The company seems to have been promising enough to get the attention of the prominent investor Tim Draper (Hotmail, Skype), who backed it once in 2013 and again in 2014 as Crunchbase data shows. However, the retention was low, so the monetization opportunities too. Yordanov, who holds a black belt in karate, was quick and smart enough to look at the customer retention data to realize that he needs a niche to combat the competition.
The new product FITE was born in November 2015. “When you are in a specific niche, it’s easier to play a big fish in a small lake”, Yordanov explained. The company headquarters has meanwhile been moved to New York, but the development and product support teams of 20 people are still based in Bulgaria. Flipps now has 25 team members and USD 8.2 M investments from Tim Draper, Earlybird and the Bulgarian fund Launchub, behind its back.
An intelligent combat on the global scene
In less than three years the new product FITE reached nearly one million of registered consumers and its main revenue comes from paying viewers, Yordanov explains. “Over 90% of our current paying users are coming from the US, the UK, Canada and Australia. We’re now carefully expanding to Scandinavia, Germany and other parts of Western Europe. MMA & boxing are global sports”, he adds.
In line with the vision of the company to offer a more complex and engaging experience to sports fans, Flipps decided to make another step forward and acquire Avid AI. Having Avid AI and its CEO Timothy Lee, a former partner at Sequoia Capital, on board, Yordanov is seeing a bright future for FITE. “Our vision for FITE is to become the destination for the combat sports fans, where they can discover and watch all the top events from all over the world, while interacting with a community of like-minded people”, said Yordanov.
The first integrations with Avid AI are already completed and users could now get personalized news feed with the latest and most relevant combat sports news from all major sources. The system constantly learns as people read articles and picks fighters of interest, to provide an even more relevant content over time.
Planned break-even 2019
Yordanov and his team are targeting the millennial audience which is looking for interactive and complex experiences. The mid-term plan for Flipps is to expand to other premium live sports event verticals. However, until then the company will be focused on developing new revenue streams such as advertising and reaching its planned break-even in 2019. “This is a huge market with over 500 million audience and 200 million active athletes. The market is growing, while the players in the niche of premium content are very few. Since FITE already has a patent for its technology and a large user base, I expect it be the one company with the biggest market share”, Lyuben Belov, partner at Launchub, told Trending Topics.