SGAG has the last laugh; Singapore startup rakes in profits from day one

Singapore

BEHIND the wacky memes and skits of SGAG, serious money is being made. Its parent company, Hepmil Media Group, has been in the black since inception. The startup recorded S$5.2 million in revenue and over S$812,800 in profit in 2020, according to regulatory filings.

But in the past 6 years, it had raised only US$900,000 from angel investors - in 2017. One could say that's "nubbad", going by the lingo of the startup with the cheeky name (try reading "Hepmil" backwards).

The company is now at an "exciting" inflection point as it evolves beyond content publishing, co-founder and chief executive Karl Mak told The Business Times.

Hepmil is tapping institutional funds for the first time, as it expands into working with digital content creators, especially in e-sports.

It has bagged US$10 million in Series A funding, led by early-stage investor Quest Ventures, Temasek unit Pavilion Capital and Bent Pixels, a US digital media company that collaborates with e-sports content creators and advertisers.

On the back of this fundraise, Hepmil is setting up a joint venture with Bent Pixels to connect e-sports content creators with brands. Called Bent Pixels Asia, the venture will be headquartered in Singapore, while also working with creators in Malaysia, Indonesia and the Philippines. It will primarily focus on YouTube content.

Hepmil traces back to 2012, when Mak and his longtime friend Adrian Ang (popularly known as "Xiao Ming") started SGAG as a hobby. Three years on, they saw the traction that the page was getting and set it up as a business. The company has since grown into a branded content specialist, bagging MNC and government clients.

"We were probably the first in the world to be meme salespeople," Mak said with a laugh. "People couldn't believe it when I was going around the different agencies, like 'Hi, I'm selling you a sponsored meme'."

Besides SGAG, Hepmil also owns MGAG in Malaysia and PGAG in the Philippines. All three businesses specialise in comical social media content, mainly in the form of memes and short video sketches. The company also publishes SGEEK, which focuses on tech gadgets.

Hepmil's entry into e-sports is part of its evolution from generating entertainment to becoming a platform for content creators, said Mak. This comes amid the pandemic-driven social media boom.

"We saw this explosion of content creators in South-east Asia because of the rise of TikTok. And with the pandemic everybody was cooped up, making a lot of content. There was this blue moon event where so many creators came up and we were wowed. A lot of them started talking to us," said Mak.

Riding this opportunity, Hepmil last year set up a new digital agency, called Hepmil Creators' Network (HCN), which connects TikTok influencers with brands to co-create content and advertising. In August this year, it incorporated Hepmil Indonesia to similarly connect comedy and entertainment influencers with brands.

Hepmil sees itself as being in a prime position to work with content creators, given that it is "one of the few companies able to build a multi-country content business in South-east Asia", Mak said.

"So we had this thesis (for HCN) and we were able to validate it very quickly when we signed on about 300 creators onto our network within the last 20 months, across Singapore, Malaysia, the Philippines and Indonesia," he added.

Hepmil believes that it can extend its success in working with mainstream content creators to those who specialise in gaming. In this niche, many content creators have large followings, but find it challenging to work with brands, noted Ang.

For Bent Pixels, the partnership with Hepmil is an ideal entry point into the Asia-Pacific. "Their track record in audience engagement and delivering effective results for brands in the consumer space is exactly the right expertise we need in cracking this highly challenging market," said Mike Pusateri, Bent Pixels' founder and chief executive.

Jeffrey Seah, partner at Quest Ventures, is bullish on Hepmil's expansion beyond content publishing. "We have been impressed by the Hepmil founders and leadership bench for a while, and we feel that it is well-positioned to achieve its vision to become a key player in South East Asia's media scene," he said.

For Mak and Ang, e-sports will further fuel the 8 revenue streams that Hepmil is focused on - what they dub a "kueh lapis" strategy, in reference to the traditional layered snack.

These 8 streams are: sponsored memes, branded videos, cast engagement fees, licensing fees, merchandising and e-commerce, TikTok-branded content, Youtube reserve media buys and TikTok media products, which it sells to brands.

Hepmil will also be pursuing more growth. It seeks to double its headcount, which currently stands at 100, over the next year. The company is also planning to expand into Thailand and Vietnam next year.

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