This is how you crowdfund a MVNO

This MVNO’s crowdfunding success is no fluke

Fluke, a Brazilian mobile virtual network operator, is a case study on how to fund a MVNO operation via crowdfunding.

Update (15 June 2021) The Brazilian MVNO Fluke has archived its R$5 million (U$ 988,000) public offering via crowdfunding.

The offer was released to the public in April . As of today, June 15, 2021, Fluke’s crowdfunding was closed on R$5.527.500,00, from 685 investors, representing 165.83% of the minimum target.

Fluke is only the second startup in Brazilian history to reach R$5 million through its digital public offering.

Earlier: As of today, May 29, 2021, the MVNO had raised U$ 902,800 from 553 investors, which is 141.53% higher than its minimum target of U$ 638,529 – and close to its maximum of U$ 957,795.

Fluke offers the investment via the crowdsourcing platform Kria, which specializes in investments for startups. Minimum investment amount per investor is U$ 479.

This is Fluke’s second round of investment. Previously, the company raised U$ 383,118 from 14 angel investors to start operations, among the investors are well-known names from the local entrepreneurial ecosystem; Pedro Conrade (Neon), Gustavo Gierun (District), Paulo Silveira (Alura), Anderson Silva (Sallve) and Fernando Nagano (Magazine Luiza).

The valuation of that round was not revealed.

Private Funding and Crowdfunding

In addition to the current crowdfunding round, Fluke is also conducting private funding with a target of U$ 1,340,914.

The private funding, which started in March, and the crowdfunding are two different investment rounds with the objective of reaching U$ 2.3 million.

It will use 50% of the proceeds for marketing and sales, 40% to hire technology and support personnel and 10% to purchase equipment and solutions.

For the Young Digitals by the Young Digitals

Fluke was created by students from the University of São Paulo and the Getúlio Vargas Foundation and chosen to represent Brazil in the International Business Model Competition (IBMC) in Utah, USA in 2018 – an annual event that rewards the best university business ideas in the world.

The goal back then was to provide “a new mobile experience for Brazilians focusing on personalization, transparency and good services through digital solutions.”- Fluke made it to the quarterfinals.

Today, Marcos Antônio de Oliveira Júnior is the CEO of the company. Joaquin Molina Castilla, leads the development. Augusto de Jesus Pinheiro, is the Chief Technology Officer and Yuki Watanabe Kuramoto, is Chief Product Director. The company has a total of 27 employees.

The São Paulo based MVNO is still keeping up with its goals from the IBMC competition. Although, Fluke’s initial plan was to target university students in the São Carlos region, the pandemic made the company expand to other places, but still keeping its target of young people (18-34 year-olds), who are already used to digital services.

The MVNO aims to be a digital mobile service, in order to reduce customer acquisition and operation costs, as well as to “speak the language” of the segment and offer suitable packages that meets the customers lifestyle.

ARPU, Margin squeeze and Projections

With an average revenue per user (ARPU) of U$ 4.40, the company has as a priority objective to increase the ARPU to U$ 6.70. For this, new package offers are being offered and new solutions are being thought out. At the same time the onboarding process of new customers is being optimized to reduce churn.

As is often the case with MVNOs that disrupts a large and concentrated market, the operating margin tends to be squeezed in the beginning but should become healthier as the customer base increase.

The MVNO has around 5,000 active customers but is projecting to have 48K subscribers by the end of 2021 with a Net Revenue of U$ 191,559, growing to 300K subscribers by end of 2022 with a Net Revenue of U$ 2.75 million. By the end of 2023 it projects 1 million subscribers with a Net Revenue of U$ 31.16 million

Fluke’s mobile service is enabled by the MVNA/MVNE Telecall, using the network of Vivo. In this initial stage, the MVNO is operating on a revenue share model where Telecall invoices customers, and passes on the amount – after reaching a floor.

Disrupt the Oligopoly with Customer Satisfaction

With a population of approximately 210 million, Brazil is one of the largest mobile telephony markets in the world. The traditional operators dominates the market share with Vivo (33.6%), Claro (26.5%), TIM (22.3%) and Oi (15.9%).

Along with this oligopoly there is alarming data when it comes to customer satisfaction: In 2018 more than 40% of The Protection and Consumer Defense Foundation’s (PROCON) complaints were about mobile telephony and on average 90 million people change operator each year.

Fluke stands out from the crowd on the latter, the company has the best Net Promoter Score (NPS) on the market and the goal is to go even further by increasing the customer’s lifetime from market average of 26 to 36 months this year. In addition, Fluke also has the best rating in the industry in the mobile app stores.

In April, Fluke added 1,372 new customers, representing a monthly growth (MoM) of 30% and U$ 10,344 in new revenues (49% MoM growth). NPS increase from 57 to 61 – the highest on the market. Service is currently available in São Paulo, Rio, Minas, Paraná, Goiás and the Federal District – with more to come.

See also: Want to invest 5,000 pesos in a MVNO? – How about 5,000 pesos for several of them?

Author: Allan Rasmussen
Managing director at Yozzo. Allan is a MVNA/MVNE/MVNO specialist with hands-on experience from more than 60 projects in both competitive and greenfield markets. His expertise includes business case development, execution, launch and growth strategies. Advisor and consultant to mobile network operators, MVNA, MVNE, MVNO, National Regulatory Authorities, Government Agencies, Broadcast Companies, TMT Industry Associations, Innovation and Investment Banks.

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