The story of Choovie and how it got startup funding
What do you get when an economist sits in an empty Melbourne movie theatre on a Wednesday night? A startup funding success story of course!
Not so obvious? Dive in to learn about how husband-and-wife team Shane Thatcher and Sonya Stephen co-founded movie ticket startup Choovie, and funded it using different types of capital along the way.
That light bulb moment
When Shane and Sonya went to the Jam Factory cinema complex in Melbourne one night, it turned out to be more than a date away from their busy family home.
It was where that light bulb moment happened for Shane – the idea of Choovie was born after the pair noticed there were only two other people in the cinema and 32 in the entire complex.
“We did a run around the other cinemas to count how many people were at the movies that night. We ended up getting kicked out,” Shane laughs.
“I’m an economist by trade and I thought, ‘this just doesn’t make sense’. I banged on about the idea of starting dynamic pricing for movie tickets to Sonya for a while but she was just about to have our fourth child and didn’t want to deal with it.”
But when a close friend in the entertainment industry agreed with Shane, the fun began.
Looking for a red flag
With Sonya on board, Shane started researching the business model of dynamic pricing, which is well established in the likes of hotels and airports.
“We thought there must be a giant red flag reason why no one was doing it for movie tickets,” Shane said. “We haven’t found one yet.”
Confident in the idea, the couple also had every reason to be confident in their ability to pull it off, each bringing valuable skills to the table.
Shane’s economics background and experience running a social enterprise startup, combined with Sonya’s background as an investment banker originally and CEO of the Cathy Freeman Foundation more recently, are a complementary combination.
Shane said there are pros and cons of co-founding a startup as a couple.
“It takes over your life but when you’re in it together, you both understand why each other is busy and there’s not that resentment that might otherwise exist if one person is working on a startup all the time and the other isn’t,” he said.
“A lot of startups fail because co-founders disagree or split up, whereas we have other reasons to work things out too. We have four kids! We do also work pretty well together because our skill sets are fairly compatible but not the same.”
Making it happen
Choovie launched in 2017 with a B2C offering, selling movie tickets directly to customers on behalf of movie theatres throughout Australia.
Its dynamic pricing model makes tickets cheaper when there are a lot of empty seats in a theatre and more expensive (though not more so than a regular full price adult ticket) when there are fewer empty seats.
The model is based on selling empty movie seats, rather than making it cheaper for customers who were already planning to go. Or in other words, getting more bums on seats thanks to better pricing, a better model and ideally, a better customer experience.
Shane said engaging a startup friendly financial adviser in the early days was vital.
“We started using Standard Ledger for our bookkeeping early on and it’s been amazing that I don’t even have to think about that side of things. But more so, they’re a financial sounding board for us and they’ve worked with us on all our capital raising, including doing the financial modelling we needed to get our initial investor to back us in the beginning.”
Equity crowdfunding success
Choovie’s next source of startup funding was equity crowdfunding, making it one of the first to use this new form of funding in Australia.
Choovie raised almost $300,000 on the Equitise platform in 2018. Shane said having the right financial advice was vital in this success.
“We needed an awful lot of support on that. It was a good experience because it made us get all our ducks in a row to be investment worthy but it’s not easy. It’s effectively as much paperwork as doing an initial public offering on the sharemarket.”
Sonya said the hard work pays off with not only the successful capital raise but in terms of marketing too.
“Equity crowdfunding gives customers the opportunity to become part of the Choovie family. It also works the other way – we get access to new shareholders who can become Choovie customers. You can’t get a more loyal customer than one who is also a shareholder,” she said.
A little pivot can go a long way
After getting off to a good start with its B2C ticket sales, Shane and Sonya looked deeply into their customer profiles and realised there was a bigger opportunity close by.
“Our customers are people who want discounts and are flexible about when they go to the movies,” Shane said.
“They’re mostly buying movie tickets through corporate loyalty programs. So we looked into those and realised they were all manual, meaning there’s a space for us to take what we’ve built for B2C and use it for corporate partners as a B2B offering, improving their customer experience and meaning we don’t need to go and find ticket buyers.”
Choovie is set to launch its first B2B program with a large Australian insurance company very soon, with several others rolling out over the next six months and plans to expand into the Asian market not long after.
Accelerating in … an accelerator
Choovie is well placed to realise its ambitious growth plans here and overseas with the support it’s receiving through Skalata Ventures, an accelerator based in Melbourne.
Skalata provides startup funding, mentoring and services to the 10 early stage companies it selects each year to help them scale and grow into sustainable businesses. And it runs a rigorous selection process to make sure it’s investing its time and funds wisely.
“Getting into Skalata involved a whole due diligence process, with everything that goes along with that,” Shane said.
“You need to have everything in order in terms of financial and legal documents, and really know your stuff. I wouldn’t recommend going through it without the right support!”
Being part of an accelerator is a great opportunity for Choovie at this stage in its journey, when it’s past the initial startup stage but not really at the venture capital funding stage yet either. And with its success so far, there’s every chance we’ll be saying “Go movies, go Choovie!” well into the future.
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