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Offered by First Democracy VC

Pixilated

Photo booth and marketing technology company

254%

Investors

201

Time to Invest

Security Offered

Convertible Debt

Minimum Investment: $100

  • Flagship product, the Pixi Cloud, launched in the fall of 2017

  • Customers have included Comcast, the University of Maryland Baltimore County (UMBC), the Baltimore Ravens, Lyft, Under Armour, Deep Eddy Vodka, GNC, and Royal Farms

  • In 2017, Pixilated generated $694,705 in revenue, an increase of 25.6% from a total of $552,903 in 2016

WEBINAR


Terms

Security Type: Crowd Note

Round Size: Min $25,000:  Max: $107,000

Valuation Cap: $3 million  

Discount: 20% 

Conversion Provisions: In connection with an equity financing of at least $1,000,000, the Company has the option to convert the Crowd Note into shares of non-voting preferred stock (Conversion Shares) at a price based on the lower of A) a 20% discount to the price paid per share for Preferred Stock by the investors in the Qualified Equity Financing or (B) the price per share based on a $3 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.

Overview

Opportunity

Marketers can have a tough job creating elaborate experiences in the hopes of capturing an audience's attention, obtaining leads, and converting them into loyal customers. From 2014 to 2016, annual consumption of experience-related services grew by 6.3%. In 2017, the market for brand activation - a strategy marketers use to engage with customers by using branded photo campaigns that people can share with friends and family - was worth about $350 billion.i,ii  These campaigns allow marketers to gather leads and measure the success or failure of their advertising with data tracking software while allowing customers to interact with the brand.

Founded in 2012, Pixilated is an open-air photo booth and marketing technology company based out of Baltimore, Maryland. The company originally focused solely on the end user's photo booth experience but has now refocused its efforts on developing a platform that not only creates fun interaction for the user but also captures leads for marketers. Its platform - the Pixi Cloud - aims to enable brands to deliver engaging experiences through a photo booth interface while capturing data and connecting an offline audience to an online marketing strategy.

Product

The Pixi Cloud

Pixilated's flagship product, the Pixi Cloud, launched in the fall of 2017. It helps businesses capture user-generated content and marketing leads. It also features marketing campaign management with an insights dashboard and a personalized messaging system. The Pixi Cloud platform was designed to integrate with email marketing platforms like Mailchimp and CRM systems, and the mobile app is built on Android to allow for cheaper hardware options and easier mobile operation.

 

The Pixi Photo Kiosk

The Pixi Photo Kiosk is an open-air photo booth for venues and event spaces that can be leveraged by brands to reach their audience. Photos can be branded and delivered to the user via email or text message. Plus, the entire experience can be customized to look, sound, and feel like the brand through the use of graphic vinyl wraps, user interface screens, and photo filters. Pixilated also offers a Snapchat geofilter that allows party planners to have guests tag their location and share it on social media.

Use of Proceeds and Product Roadmap

Pixilated developed its own software to serve its growing business-to-business client base and to streamline its existing events operation. The funds raised will be used to further improve its Pixi Cloud software product and implement upgrades to its kiosks. If Pixilated raises the maximum amount of $107,000, it estimates using the proceeds primarily for future wages ($50,000), general working capital ($22,510), equipment purchases ($15,000), research and development ($10,000), and general marketing ($2,000). If Pixilated raises the minimum amount, it estimates using the proceeds primarily for future wages ($10,000), equipment purchases ($10,000), and general working capital ($3,250).


Business Model

Subscription (Software-as-a-Service) with Hardware Purchase

The company will offer a packaged one-time hardware purchase (Pixi Kiosk) of $3,000 and a one-year software licensing subscription for $2,400. The software licensing fee is billed monthly for $200 and automatically renews after 12 months. Discount rates may be provided for multiple license orders and will follow the same monthly recurring revenue billing schedule.  

Short-term Rentals

Additionally, the company will continue its legacy short-term event rental operations through its e-commerce booking website. The Pixi Kiosk is priced at $250 to $450 per day, depending upon features and the length of rental time. These units are shipped directly to customers with prepaid return shipping.

Pixilated is targeting top national brands and mid-market regional brands who are spending heavily in the brand activation space. More specifically, it targets brand marketers focused on events and entertainment that rely heavily on lead capture as part of a customer acquisition and retention strategy. Pixilated has already gained user traction in this area by working with brands such as: Comcast, the University of Maryland Baltimore County (UMBC), the Baltimore Ravens, Lyft, Under Armour, Deep Eddy Vodka, GNC, and Royal Farms.

 


In 2017, Pixilated generated $694,705 in revenue, an increase of 25.6% from a total of $552,903 in 2016. The first quarter of 2018 showed positive growth year over year, up 35.8% from $145,582 in Q1 2017 to $197,765 in the same period 2018.

Note: Monthly financials have not been audited or subject to financial review

In 2017, total expenditures, including costs of goods sold, increased 116% year over year to $964,535. Cost of goods sold totaled $194,878, and total operating expenses came in at $769,657. Total payroll expenses were the largest operating expense ($405,381), followed by advertising expenses ($54,243). Total expenses for Q1 2018 were $225,529.

Note: Monthly financials have not been audited or subject to financial review

In 2017, the company incurred a total net operating loss of $269,830, but had a positive total net operating income of $106,676 in 2016. Net income decreased year over year as a result of higher operating expenses, notably payroll, which increased 159% in 2017 as the company hired more employees. 

Note: Monthly financials have not been audited or subject to financial review

Press

Biz Journals: Pixilated closes first funding round to expand, build software

Technically Baltimore: Why a photo-booth company went all-in on software

Baltimore Magazine: Start Me Up – A regular entrepreneur event aims to make networking more fun.

Technically Baltimore: With WallPixi, Pixilated looks to spread photo kiosks that anyone can use

Industry

Pixilated's business falls into two market categories: the brand activation market and the open-air photo booth market.

The Brand Activation Market

According to a forecast from the Association of National Advertisers (ANA), the brand activation market generated $337 billion in revenue in 2016, up 6.7% from 2015. ANA estimated that revenues would reach $357 billion in 2017.iii  

Experiential marketing is a subset of the brand activation market and can be used in event marketing, business-to-business live events, tradeshow promotions, cause-related initiatives, grassroots marketing, and sponsorship. In 2016, the experiential marketing sector generated over $50 billion, up 6.7% year over year. This increase in brand activation revenues is driven in part by companies looking to generate more traffic and leads. According to HubSpot, 63% of companies stated that generating traffic and leads was their top marketing challenge.iv

The Photo Booth Market

In 2016, there were 226,600 monthly searches for the phrase "photo booth," a 48.9% increase from the previous year.v  The growing demand is attributed to the rise of social media sharing, which allows users to share photos instantly through options embedded in the booth's software. In 2016, Deloitte estimated that 2.5 trillion photos would be shared online, a 15% increase from the prior year.vi

Competitors

Simple Booth: Founded in 2013, Simple Booth provides a photo booth experience with a custom round light fixture, an iPad mounting device, and a free app available for iPhone users. Its photo booth device - HALO - is priced at $3,200 and comes with a full suite of lead capturing and analytics software.vii  In 2017, Simple Booth had more than 4 million unique layouts and GIFs uploaded to its database and shipped more than 500 HALO devices to 20 different countries.viii

The Bosco: Founded in 2011, The Bosco provides a photo booth experience that features photos, GIFs, and videos. Its products include the Video Booth, the GIF Booth, the Multicam, and the Bosco Lite - a 4-square-foot, non-printing, GIF iOS product. All of the products can be rented for parties and events or purchased for permanent installations. Aside from photo booth products, The Bosco has collaborated on custom projects with business such as H&M, Lexus, Pandora, Metlife, and others.ix  The Bosco charges $40,000 to more than $120,000 for these customized projects.x  

MVS Studio Inc.: Founded in 2003, MVS Studio offers open-air photo booths for private and corporate events. It has offices in New York City, New York, and Los Angeles, California, but its photo booths are available for rent or purchase worldwide. MVS Studio's photo booths offer stills, GIFs, instant print, filters, 360-degree photo booth technology, and social media sharing.  

Capture POD®: Founded in 2005, Capture POD offers several types of photo-taking services for corporate events, personal events, and weddings. The company has two types of booths: Capture Scope, a photo booth with nine cameras that creates a "freeze-motion" video, and Capture POD, a curved-style photo booth equipped with a DSLR camera, flash lighting system, and multiple backdrops. Capture POD has served clients such as Neiman Marcus, Mercedes-Benz, Microsoft, and Bloomingdale's.xi

TapSnap: Started in 2012, TapSnap is a photo booth rental company that gives customers the option to either rent or buy photo booths, with over 160 photo booth franchises across the world.xii  The company's booths can be used for a variety of events including birthdays, weddings, and graduations. Each booth includes digital props, green screens, and social media sharing. TapSnap's clients include Westin® Hotels and Resorts, NBC, Visa, UPS®, and Jeep®.xiii  

Team

Nicolas China, Co-founder and CEO: At Pixilated, Nicolas drives both product design and growth strategy and builds the supporting organizational infrastructure. Since its founding, he has helped Pixilated generate total revenues of more than $2 million to date. Prior to Pixilated, he spent five years as a project manager for his family's contracting business, managing $5 million in contracts with crews of up to 25 workers. Nicolas graduated from Wake Forest University with a bachelor's degree in Art, specializing in photography, design, and sculpture.



Patrick Rife, Co-founder and CVO: At Pixilated, Patrick oversees business development, sales, and marketing. Prior to Pixilated, he worked for Bonsai Art, where he became Operations Manager. Patrick has managed large-scale art installations at institutions, museums, and for private collectors around the country. Before that, while pursuing a career in music, he ran his own small business focused on satellite network installation and home entertainment technologies. Patrick graduated from the University of Maryland Baltimore County with a BA in Art History.


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