Rightster: Charlie Muirhead
A £20.4m fundraising via today's AIM listing in the bag, Growing Business takes a closer look at video marketing platform Rightster
With £20.4m in its back pocket after one of the most anticipated UK tech IPOs of the year, Rightster has eyes on global growth.
The video marketing and distribution platform’s content garners in excess of 160 million views a month, revenues already exceed £4m, and the flotation on the London Stock Exchange’s AIM market has given it an institutional stamp of approval and platform to make more noise.
Founded by 38-year-old serial entrepreneur Charlie Muirhead, Rightster has grown in just two years to become one of the hottest properties on the market and early trading today suggested there’s appetite with the market cap hitting just shy of £70m and share price rising. Time will tell.
But what exactly is Rightster, who is Muirhead, and why is this IPO big news for tech start-ups across the UK?
What is Rightster?
Muirhead, who has previous with public markets having taken his first company to America’s NASDAQ at the height of the late 1990s dotcom boom, is no longer the precocious twentysomething who started music rental business Orchestream but an entrepreneur with a series of launches behind him.
With high-speed internet rising to near-ubiquity in the last 10 years, video content on the web has never before been so popular or widespread. The increasing proliferation and ease of creation of video content helped by hosting sites such as YouTube has, however, created its own challenges.
“It’s complex, because online is such a fragmented space,” Muirhead told the Guardian in a video interview last year. “It’s hard to get your content in front of the right audience, it’s hard to build a loyal following around your content, and selling advertising is a challenge in its own right.”
Rightster was formed in May 2011 by Muirhead in an attempt to address these issues; by offering a unified software-as-a-service (SaaS) platform, media companies can target audiences, monetise content, micro-manage geographic rights to videos and network with publishers who are part of the Rightster network.
“We saw the opportunity to create a services business that could provide a turnkey solution for content producers and publishers, who wanted to focus their time on actually making great content,” Muirhead said.
The tech entrepreneur has stated Rightster’s ultimate aim is to automate every single aspect of content dissemination on the web, spanning distribution, marketing and monetisation. “Basically, it’s all about speed to revenue, and ultimately, speed to profit [for content producers],” explained Muirhead.
Claiming to be the only service of its kind in the world, Rightster has developed its offering by entering content genres (otherwise known as ‘industry verticals’) by securing high-profile rights deals for live content – covering events including the Royal Wedding and the Leveson Inquiry – and recruiting more publishers and content owners off the back of the exposure generated.
In what the company terms the ‘network effect’, every deal concluded in this way makes Rightster’s offering more compelling to other potential customers in the sector, allowing it to very quickly become an industry standard.
This approach has yielded dividends for the fast-growing company. Initially targeting the fashion sector with the British Fashion Council (BFC) as its first customer, it has since expanded to encompass the sports, news, entertainment and viral video genres and now claims to generate more than 160 million views a month, with 200 staff in 9 countries managing the service.
With revenues approaching £5m, Rightster has further consolidated its offering by concluding a number of acquisitions; in October 2012, it acquired 25% of viral marketing company VML (known as ‘Viral Spiral’) to become its exclusive monetisation and distribution partner for content uploaded to third-party hosting platforms (such as Youtube).
Rightster marked two further major deals this year as it acquired assets belonging to UK display advertising sales company Sports Syndicator and purchased film trailer distributor Preview Networks outright for €2.1m. This month, it was listed as one of the 63 UK tech companies with £100m revenue potential by Silicon Valley Comes to the UK.
Who is Charlie Muirhead and where did Rightster come from?
With a successful career spanning both sides of the dotcom boom, serial entrepreneur Charlie Muirhead is one of the UK’s tech industry veterans, with a particular reputation for raising finance.
His first business, data management company Orchestream, was founded in 1996 when the 21-year-old Muirhead was studying at Imperial College London; he soon dropped out to focus on the business full-time. This proved to be an astute decision, as just three years later the company was worth an estimated £1bn – having raised over £50m in VC funding – and was listed on NASDAQ.
Stepping down as CEO of Orchestream in 2000, Muirhead went on to found data communications company Nexagent, which also proved a popular proposition with investors; in 2002, the company raised £10.3m in its first round of funding from a group of venture capital firms. During this period, Muirhead also founded digital start-up incubator iGabriel (which eventually became Pi-Capital) and telecoms software company Interprovider.
His most recent venture before starting Rightster was t5m (The 5th Medium Limited), founded in 2007, which started as a socially-conscious online ‘television channel’ but relaunched in 2008 as a content producer and syndication platform distributed via its custom-built video player technology. Despite attempts to resurrect with online-first TV programming, including Trinny and Susannah: What They Did Next, the company quietly faded away.
Muirhead has said t5m’s commercial difficulties formed the genesis of Rightster; by experiencing first-hand the problems with monetisation and targeting of online video, he saw the opportunity for a service that could streamline the whole process.
Why has Rightster pulled off one of the most successful UK tech IPOs of 2013?
The online video sector is a huge and lucrative one; according to industry analyst Informa Telecoms and Media, it will constitute a £9bn market in 2013, with this set to rise to £24bn in 2017.
Despite not being as high-profile as front-end providers such as YouTube, Rightster’s novel technology is currently unmatched by any company anywhere else in the world and its stated aim of providing a one-stop solution to content distribution could have huge implications for both the future of the company and online video in general.
With a growing list of household-name clients including ITN Productions, the Guardian, IMG Fashion, and Mercedes-Benz, Rightster is also just behind Disney in the rankings of the world’s leading online multi-channel networks.
Despite already having nine offices in 11 countries, its effective lack of competition means there is still significant potential for growth in new verticals and geographical sectors. With Rightster’s proposition and Muirhead’s impressive track record, it seems clear that the burgeoning digital company is going places – early signs suggest investors on AIM agree, with the share price having jumped 7% to 75p at the start of trading this morning.
Where does Righster go from here?
The company’s share document, released today, says the IPO will help fund the finishing touches and subsequent worldwide roll-out of its second-generation platform, which will release before the end of the year.
Exactly what the second-generation product will constitute is not clear; but it is expected to automate even more of the content upload and monetisation process for media companies, in line with Muirhead’s overall strategy for the company.
In terms of international expansion, Rightster already has a significant presence in UK and European markets, but its impact in the US has been relatively modest – accounting for less than 2% of overall revenue. Although the US is not explicitly outlined as a target in the share document, it is expected that the media company will attempt to make significant inroads into an area with huge potential.
Further acquisitions of competitors are also likely; the IPO will provide Rightster with a significant injection of working capital, which it says will be used to acquire companies “if suitable opportunities arise”. Rightster has said discussions with a number of possible targets are ongoing, with further details to be provided following the AIM listing.
What does the listing mean for UK tech companies?
The UK tech sector is very much in vogue at the moment, with initiatives such as Tech City and the Silicon Roundabout generating a number of high-profile success stories such as online video distribution platform Blinkx – which posted record profits of more than $17m this year – and Tom Allason’s delivery service Shutl, winner of the 2012 Startups 100 and acquired by auction giant eBay.
Michael Acton Smith’s Mind Candy is another that has flirted with the public markets, but has not yet taken what seems an inevitable plunge.
The fact is few of the UK’s brightest tech companies have yet taken the decision to go public, with most preferring to garner venture capital investment to grow. The trickle of 2012 failed to turn into a torrent.
In addition to long-time AIM-listed Blinkx, other notable exceptions include collaboration software company WANdisco, which marked a successful IPO last year when it was valued at £37m in an oversubscribed AIM listing, whilst Philip Letts’ Blur Group raised £4m on the exchange in October 2012.
Whilst this is all well and good, UK tech sector commentators hanker for more high-profile public listings to hasten the sight of British companies genuinely competing on the global stage – the comparative lack of flotations is in sharp contrast to the routine IPOs experienced in the US’ Silicon Valley.
Twitter’s hyperbolic public offering saw shares in the company jump 73% and has sparked a flurry of activity in the US tech sector, with three more companies set to go public this week; it is hoped that Muirhead’s endorsement will generate similar activity in the UK. At the very least, it means AIM should be part of tech entrepreneurs’ thinking in the near future.