Clifftop Ventures, the venture investment arm of Clifftop Colony, has increased its Equity Capital Drawdown Facility (ECDF) for South African online audio services company iono.fm to ZAR4 million (US$314,000).
The fresh capital from Clifftop Ventures will be provided by topping up the existing ECDF and used to solidify the business in 2018 and to commence the expansion outside of South Africa into larger African markets, such as Kenya, Nigeria and Tanzania.
“We have made enormous progress this year. Together with Clifftop, we refined our strategy by focusing the business on radio stations and professional podcast producers”, said Ryan Dingley, founder and chief executive officer (CEO) of iono.fm.
“We experimented with an equity drawdown structure this year and found in the case of iono.fm it worked really well for both the team in the venture company and investors”, said Oliver Drews of Clifftop Colony.
“It’s basically a framework agreement with a special purpose vehicle which provides certainty of funding for an agreed commitment amount and adjusts valuations over time. Our investor base is predominantly European and US-American, so a 12J structure doesn’t work for us and we had to come up with something different, but did not want to go down the VC fund or corporate venture capital route. I think for early-stage companies with a proven annuity based business model like iono.fm the ECDF we developed is an interesting funding solution and we will continue to refine this structure further.”
With approximately 15 million unique users in the last 12 months, 1,500 active audio channels and 250,000 active episodes from more than 250 content providers, iono.fm says it has become one of the largest audio media content platform providers in Africa. Its customers are radio stations that use iono.fm to transcode, host and distribute their audio content via their own websites and various other distribution channels, such as iTunes.
“We also assist other professional producers of audio content who are looking for an innovative and highly analytical distribution platform,” Dingley said.
For radio stations in South Africa, iono.fm offers a turnkey solution to add new digital revenue streams at very little cost by using its advertising engine to dynamically insert and remove advertising campaigns into and out of the audio content.
“Radio stations have also realised that there is a growing need to satisfy on demand radio consumption following what has been witnessed in the video on demand space and iono.fm provides the tools to achieve that goal,” said Dingley.
“We have built in some unique features to the platform, such as multiple audio quality levels and file-based ad insertions, to account for the special conditions in Africa. This allows us to penetrate markets other providers from the developed world cannot access on a broad scale.”