October 27, 2015 at 13:30Why 2GIS attracted equity financing for the first time, changing its long-term strategy
Company 2GIS raised $ 40 million investment from funds Baring Vostok and ru-Net . The funds received will be invested in the development of new 2GIS products, active promotion in Moscow, St. Petersburg and other large cities of Russia, as well as the launch of the service in international developing markets. As a result of the transaction, the funds received a minority stake in the company, 2GIS said in a statement .
Earlier, the founder of 2GIS, Alexander Sysoev, adhered to the following principle: (quote from Tony Shea from Zappos): “If you have the opportunity to develop without funds, do it to the last.”
Why did he change his mind? In addition to him, some facts can only give a tentative answer to this question.
“No one in the world is currently monetizing the cartographic service. We earn the most in the world and started to do it first. ” In 2013, 2GIS earned 3 billion rubles, Sysoev reported last year.
But the sharp increase in the scale of the 2GIS business in 2009-2012 required the company to make large investments in infrastructure and personnel. At the end of 2014, DublGIS bought 12 floors of the building on a loan from Sberbank. The new office was equipped "in the spirit of the best IT companies in the world."
The company selects potentially interesting cities to launch 2GIS, and then finds a local partner who is ready to develop business in this village. The average cost of a franchise in Russia is $ 200 thousand. Despite the devaluation of the ruble, the declared cost of entering the 2GIS business did not decrease. Now, on each transaction, the company loses due to the difference in rate.
Sysoev is not looking for partners abroad, they are turning on their own. According to the head of DublGIS, the cost of launching 2GIS in a millionth city abroad starts at $ 1.5 million. Already working projects in Limassol (Cyprus), Santiago (Chile), Prague (Czech Republic), Dubai (UAE). None of them came to payback. “So far this is an experiment, testing technology,” says Sysoev.
President of 2GIS Vera Garmash:
In February, Forbes estimated the cost of 100% 2GIS at $ 150 million, putting it in 17th place in the ranking of "20 most expensive companies in Runet." In a deal with Baring Vostok and ru-Net, the company was valued above $ 150 million, a representative of 2GIS assures. Thus, the share of funds in 2GIS does not exceed 26.7%, Kommersant writes .
“The foundation’s team was impressed by the wide coverage and high frequency of use of mobile applications and the 2GIS website, which shows the demand for the product to users,” says Elena Bashentseva, senior partner at Baring Vostok Capital Partners.
“By emphasizing the quality of data and its completeness, 2GIS managed to build one of the most popular consumer Internet services,” commented Leonid Boguslavsky, founder of ru-Net. “With the growth of mobile Internet, the local search and navigation market is developing very rapidly throughout the world, and 2GIS already occupies one of the leading positions on it.”
The head office of 2GIS is located in Novosibirsk. Today 2GIS covers more than 280 cities in 8 countries, mainly in Russia, as well as in Kazakhstan, Cyprus, Italy, the United Arab Emirates, Ukraine, Czech Republic and Chile. The audience of 2GIS exceeds 41 million users per month, of which more than 27 million account for the online version and applications of 2GIS, 14 million account for sites of partners that use the data of 2GIS.
More than 38,000 advertisers use 2GIS to attract customers. In many cases, 2GIS is the most effective channel for attracting a local audience. The total advertising sales in 2014 exceeded 4 billion rubles.
Earlier, the founder of 2GIS, Alexander Sysoev, adhered to the following principle: (quote from Tony Shea from Zappos): “If you have the opportunity to develop without funds, do it to the last.”
Why did he change his mind? In addition to him, some facts can only give a tentative answer to this question.
“No one in the world is currently monetizing the cartographic service. We earn the most in the world and started to do it first. ” In 2013, 2GIS earned 3 billion rubles, Sysoev reported last year.
But the sharp increase in the scale of the 2GIS business in 2009-2012 required the company to make large investments in infrastructure and personnel. At the end of 2014, DublGIS bought 12 floors of the building on a loan from Sberbank. The new office was equipped "in the spirit of the best IT companies in the world."
The company selects potentially interesting cities to launch 2GIS, and then finds a local partner who is ready to develop business in this village. The average cost of a franchise in Russia is $ 200 thousand. Despite the devaluation of the ruble, the declared cost of entering the 2GIS business did not decrease. Now, on each transaction, the company loses due to the difference in rate.
Sysoev is not looking for partners abroad, they are turning on their own. According to the head of DublGIS, the cost of launching 2GIS in a millionth city abroad starts at $ 1.5 million. Already working projects in Limassol (Cyprus), Santiago (Chile), Prague (Czech Republic), Dubai (UAE). None of them came to payback. “So far this is an experiment, testing technology,” says Sysoev.
President of 2GIS Vera Garmash:
Earlier 2GIS developed without attracting equity financing, we used our own and credit resources. We managed to achieve a lot, in particular 2GIS entered the top ten largest companies in Runet. We have come to a new stage in the history of the company - we intend to strengthen the promotion of services in the European part of Russia, open our own branches abroad, supplementing the existing franchising area, and also actively develop the development of our own products. We attract investors for these purposes. I am grateful to our partners for appreciating the potential of 2GIS.
In February, Forbes estimated the cost of 100% 2GIS at $ 150 million, putting it in 17th place in the ranking of "20 most expensive companies in Runet." In a deal with Baring Vostok and ru-Net, the company was valued above $ 150 million, a representative of 2GIS assures. Thus, the share of funds in 2GIS does not exceed 26.7%, Kommersant writes .
“The foundation’s team was impressed by the wide coverage and high frequency of use of mobile applications and the 2GIS website, which shows the demand for the product to users,” says Elena Bashentseva, senior partner at Baring Vostok Capital Partners.
“By emphasizing the quality of data and its completeness, 2GIS managed to build one of the most popular consumer Internet services,” commented Leonid Boguslavsky, founder of ru-Net. “With the growth of mobile Internet, the local search and navigation market is developing very rapidly throughout the world, and 2GIS already occupies one of the leading positions on it.”
The head office of 2GIS is located in Novosibirsk. Today 2GIS covers more than 280 cities in 8 countries, mainly in Russia, as well as in Kazakhstan, Cyprus, Italy, the United Arab Emirates, Ukraine, Czech Republic and Chile. The audience of 2GIS exceeds 41 million users per month, of which more than 27 million account for the online version and applications of 2GIS, 14 million account for sites of partners that use the data of 2GIS.
More than 38,000 advertisers use 2GIS to attract customers. In many cases, 2GIS is the most effective channel for attracting a local audience. The total advertising sales in 2014 exceeded 4 billion rubles.