A Kanata firm hopes millions of dollars in new funding will help it turn more cord-cutters on to its technology that records over-the-air TV broadcasts and streams them to devices such as smartphones.
Nuvyyo said Tuesday it has closed a $6-million series-B financing round led by Ottawa’s Celtic House Venture Partners, which also backed the company’s $4-million series-A round back in 2013. Export Development Canada also participated in the latest round.
Founded in 2010, Nuvyyo makes hardware and software that caters to viewers who access TV broadcasts via old-school antennas rather than cable or satellite feeds.
Nuvyyo has a two-pronged revenue stream. In addition to its flagship hardware, a DVR called the Tablo that records over-the-air programs, the company also sells subscription-based software that gives viewers a grid-based TV guide and allows them to stream recorded shows on other devices such as smartphones, tablets and laptops.
About 95 per cent of its customers are in the United States, where the Tablo is found in Best Buy stores and sold on Amazon. But CEO Grant Hall says the company is only scratching the service of its potential south of the border.
“The U.S. is a huge market, and even though we’re extremely successful, we’re still really only satisfying a fraction of that market,” Hall says. “There’s still plenty of opportunity to grow our U.S. presence.”
In the last decade, antenna use has surged more than 50 per cent in the U.S., while a recent study by research firm eMarketer suggested as many as one in five households – or about 26 million homes – could be cord-cutters by 2022 as consumers ditch pricey pay-TV packages in favour of free broadcasts and streaming services such as Netflix.
Supplying that thirst for free content is clearly a lucrative endeavour that’s paying dividends for Nuvyyo. Three years ago, the 17-person firm appeared on OBJ’s list of Ottawa’s fastest-growing companies with three-year revenue growth of more than 250 per cent – a pace Hall concedes it hasn’t been able to match since.
Manufacturing is a capital-intensive business, he explains – not to mention the additional costs of shipping DVRs from Nuvyyo’s plant in China to North America and getting them on store shelves. Churning out more products means spending more money, and there’s always a lag between the time merchandise lands in a store and when the proceeds from those sales funnel back to the manufacturer.
“The key to our success is we have to get hardware into customers’ hands,” Hall says. “One of our challenges has been that that takes some working capital. Our ability to fund that working capital is really what’s constrained our growth in the last couple of years.”
The COVID-19 crisis didn’t help, he adds. Initially, the pandemic in China grinded production of Nuvyyo’s DVRs to a halt. Once things ramped up across the Pacific again, the virus struck the U.S. with a vengeance, causing overall retail spending to crater.
But Hall sees clearer skies on the horizon. He’s banking on trends that suggest the sluggish economy will prompt even more consumers to forego cable receivers in favour of antennas and the free programming they offer. Meanwhile, Nuvyyo continues to beef up its product offerings – its most recent feature being machine-learning software that automatically skips past commercials on recorded programs.
“We pride ourselves as a very innovative company,” Hall says.
Celtic House partner David Adderley said the firm is bullish on Nuvyyo’s future.
“Nuvyyo has consistently delivered upon its mission to provide consumer-friendly technology for cord cutters with features like Tablo automatic commercial skip service, challenging major incumbents in the retail DVR space for market share,” Adderley said in a statement.
“As the trend of cutting the cord on cable TV accelerates, we have no doubt Tablo products will remain a leader in value, flexibility, and ease-of-use.”
Hall says Mexico, which has the same coding standards for over-the-air TV signals as the U.S. and Canada, is the company’s next likely target market. Europe and most of Asia use slightly different technology, meaning Nuvyyo’s software will have to be tweaked for those regions, something Hall says will happen down the road.
In the meantime, Nuvyyo will focus on forging new retail partnerships and boosting R&D spending in a bid to make his products even more attractive to the growing segment of the population that no longer considers cable and satellite fare to be must-see TV.
“We hope to be back on (the fastest-growing companies) list very soon,” Hall says. “That’s what this series-B round is intended to do.”