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Westbury Banker Quoted in MergerMarket

An article published today by MergerMarket, focusing on DeepMarket (TSXV:MKT; OTCMKTS:CNDRF), a Calgary, Alberta-based developer of game-based promotions management solutions, quotes Westbury partner Jon Rubin.

DeepMarkit to launch games-based marketing platform in June, might attract interest one year later

April 12, 2016

DeepMarkit (TSXV:MKT; OTCMKTS:CNDRF), a Calgary, Alberta-based developer of game-based promotions management solutions, plans to commercially launch its flagship product in June, said CEO Darold Parken.

Its platform solution FetchBot is a game-based promotions management solutions designed to engage consumers through online channels and platforms. It includes a broad selection of promotion types (instant win, sweepstakes, giveaways, etc.) along with a variety of games that clients can add to their promotion. Social media integration, combined with comprehensive reporting and analytics, add to FetchBot’s effectiveness, Parken explained.

DeepMarkit is targeting 7,000 small-to medium-sized North American customers within its first year of sales, which would give it approximately CAD 5m in revenue, according to Parken. It is aiming for break-even 12 months after the launch, at which time it might become attractive to potential buyers, he said.

The company’s current market capitalization is approximately CAD 10.6m (USD 8.2m).

FetchBot is “an interesting, compelling product” that would likely attract buyers once its gains traction in the marketplace, said Jonathan Rubin, partner at investment bank Westbury Group. He and a second industry banker agreed that DeepMarkit might garner interest after successfully marketing its product for roughly one year.

DeepMarkit could potentially attract venture capital at that time, though Rubin said a more likely buyer would be a larger strategic company seeking to add new marketing tools to its offerings.

It’s also possible DeepMarkit could leverage its market success to move up to a larger Canadian and/or US exchange, such as the Toronto Stock Exchange or NASDAQ, in conjunction with a secondary offering, Rubin added.

DeepMarkit plans to acquire customers via direct sales and potential partnerships with e-commerce software, domain name and website hosting players such as Shopify (NYSE: SHOP), Bigcommerce, Magento, GoDaddy (NYSE: GDDY), Web.com (NASDAQ: WIX) and Squarespace, Parken said.

Those same types of potential partners could also be logical buyers, he added, when asked.

Rubin agreed that domain hosting companies such as GoDaddy and website developers such as Wix.com (NASDAQ:WIX) and Squarespace could be possible suitors. He also reasoned coupon companies including RetailMeNot (NASDAQ: SALE) might want to “gamify” their offerings.

However, Rubin cautioned that DeepMarkit will most likely see more investor/buyer interest if it shifts to a subscription-based offering, as opposed to its current per-campaign pricing model.

Parken said DeepMarkit is starting with a price-per-campaign model but plans to introduce a subscription model.

Based on a recurring-revenue model, Rubin speculated DeepMarkit could command a multiple of 2x-4x revenue in a sale scenario, and potentially higher if exponential growth kicks in.

According to Parken, DeepMarkit competitors include other online incentive marketing companies such as Woobox and Snipp Interactive (CVE:SPN).

DeepMarkit was formerly coal mining company Challenger Deep Resources. It completed a change of business in October 2015.

Parken, who was hired in January 2015, founded and was former CEO of online gaming software development company Chartwell Technology, which was acquired by Amaya Gaming in 2011.

Deepmarkit plans to raise CAD 1m in equity within the next 60 days to support commercialization. Roughly six months after FetchBot’s launch, the company expects to embark on another equity raise for roughly CAD 2m, “targeting strategic investors to increase its market penetration and expansion,” Parken said.

It has used half of an up to CAD 1m debenture financing received earlier this year from Rupertsland Investment. Rupertsland is controlled by Ranjeet Sundher, director at DeepMarkit and its executive vice president of corporate development.

There is opportunity for DeepMarkit to market to other English speaking countries, though right now it "can't afford" international expansion, Parken noted. The company also has other game-based loyalty program and survey products in its development pipeline.

Its corporate advisors include law firms DLA Piper and Burstall Winger Zammit, and accounting firm Crowe MacKay.

by Deborah Balshem in Ft. Lauderdale, Florida


Short description: 
Westbury banker Jon Rubin was quoted in an article published today by MergerMarket.