Singapore’s premium collectibles maker XM Studios raises S$4.5 million with eye on expansion
SINGAPORE: XM Studios, a homegrown design studio specialising in handcrafted figurines of characters from popular media franchises such as Marvel and DC Comics, has raised S$4.5 million in fresh capital as it eyes an expansion into new markets and products.
The funds were raised through a tokenised offering on digital securities investment platform ADDX, according to a joint press release by XM Studios and ADDX on Thursday (Sep 9).
Heliconia Capital Management, a subsidiary of Temasek Holdings, anchored the deal with a S$1 million investment. This comes a week after it was announced that Heliconia had entered into an agreement to become a new strategic investor of XM Studios.
Apart from raising awareness of the company within the financial community, XM Studios decided to raise capital through digital securities as a way of rewarding its community of fans, co-founder and chief executive Ben Ang said.
“XM Studios has grown from a humble shop in Singapore’s Bras Basah Complex into a global brand. We could not have done this without the consistent support of our fans and collectors over the past decade.
“The fundraising on ADDX was designed to allow fractional access at a minimum investment of just S$10,000 because we wanted to provide long-time XM Studios fans with the chance to take part in the growth of the company,” he said.
What are digital securities
Digital securities, also known as security tokens or tokenised securities, refer to financial securities such as stocks, bonds, funds that are issued and stored on a blockchain.
By tapping on blockchain and smart contract technology, a digital securities exchange like ADDX “tokenises” and “fractionalises” these securities into multiple, smaller digital asset tokens.
This lowers the investment threshold and expands access to a wider range of individual accredited investors, beyond just institutions or ultra-high-net-worth individuals. Issuers also get to benefit from a larger pool of potential investors.
In the case of XM Studios’ offering, ADDX was able to reduce the minimum investment size to S$10,000, from the minimum of S$1 million that is typical for such investments, its press release said.
The use of blockchain technology also automates certain manual processes, thus allowing lower issuance costs and a shorter lead time from the planning and structuring of a deal to the final issuance.
Apart from ADDX, which was founded in 2017 and formerly known as iSTOX, Singapore’s largest lender DBS launched its own digital exchange for digital assets at the end of last year to provide tokenisation, trading and custody services to institutional and accredited investors.
XM Studios’ offering was initially set at S$3 million but later upsized to S$4.5 million “to accommodate high demand from investors” during the subscription phase, said the joint press release.
Apart from Heliconia, other international accredited investors, which were not named, took part “on the same terms” as the investment firm. The offering was 1.75 times over-subscribed based on XM Studios’ fundraising target.
The offering took the form of exchangeable notes that “are redeemable for shares in XM Studios at a significant discount under specific liquidity scenarios”. If the exchangeable notes are not redeemed within 18 months, the notes will mature at an interest rate of 6 per cent per annum, the joint release said.
Primary subscriptions have closed. XM Studios tokens are now listed on the ADDX secondary exchange, where they can be traded by all accredited investors including those who did not subscribe in the first instance.
ADDX’s chief commercial officer Choo Oi Yee described XM Studios as “a superhero of a company”. “Even as it grows rapidly, the firm has succeeded in turning profitable, making it an attractive investment proposition,” she added.
FROM S$1,000 TO MILLION-DOLLAR FIRM
The latest announcement adds another feather to the cap of XM Studios, which has come a long way since its humble origins as a collectible toy store in Bras Basah Complex.
In 1997, Mr Ang and his brother Seng took S$1,000 – money that was meant for polytechnic school fees – to take over the collectible toy store, Xenomorph.
But the road to success has not been easy and keeping the business afloat saw the two brothers diversifying into teaching painting, and making large-scale models for companies like Universal Studios Singapore.
Mr Ang, in an interview with TODAY last November, recalled how his brother had considered becoming a taxi driver if their business failed. That was the impetus for him to think about a change in the business model and eventually jumping into the world of licensing.
He began knocking on the doors of Warner Brothers and Disney. It took two years of setbacks and rejections before Disney finally called back in 2013, TODAY reported.
Now, XM Studios holds several intellectual property licenses including those for Marvel, Star Wars, DC Comics, Harry Potter, Looney Tunes, Godzilla and Sanrio.
Its name is well-recognised in the global collectible figurines industry as one of the top studios creating premium handcrafted figurines. Depending on complexity and size, these collectibles are priced from under S$1,000 to S$6,000.
XM Studios now employs around 65 employees in Singapore and China, where its quality-control facility is located.
Fortunately, the COVID-19 pandemic has not derailed growth. Last year, the company managed to more than double its revenue to S$16.9 million, while net profit came up to S$4.2 million.
The rise in demand came as collectors were spending a lot more time at home admiring their collections, Mr Ang told CNA in an emailed interview. The inability to travel also meant “extra savings” for some.
That said, the pandemic did cut off an important platform for XM Studios – comic conventions, which it used to attend frequently with its distributors.
So it quickly ramped up digital marketing efforts to ensure an online presence, and constantly engaged its community of fans through social media platforms like Facebook.
Such moves were necessary given the rising tide of online shopping during the pandemic, Mr Ang said.
NEW MARKETS, PRODUCTS AND CONCEPT STORE
Moving forward, XM Studios will look to expand its business in two new markets – India and the Middle East – and different product categories, such as the “premium mass” and lifestyle products.
“We want to nurture new collectors and expand the community,” said Mr Ang, while noting that the “premium mass” collectibles will be priced at less than S$300 to reach out to young adults and casual collectors.
These could be “more fun and designer-range products to appeal to the masses, as well as the female demographic”, he added.
The fresh capital will also go to acquiring new intellectual property licenses and general working capital purposes.
Meanwhile, XM Studios is set to open its flagship concept store at the end of the year, Mr Ang said.
Located at Kitchener Complex, this 19,000 sq ft store will have a retail space, gallery, cafe and office all under one roof.