Russia

The house of fairytales became a successful business idea

Case Kidburg

 

On the way to Russia’s leading edutainment company

Kidburg was founded in 2009 by two mothers who wanted to offer their children more intellectual entertainment than video games. Their first initiative was a concept called “house of fairytales”: they rented a 200,000 square-metre basement, decorated it and hired professional actors to play fantasy characters and interact with children who became part of a fairytale. The concept became a huge success and they soon started to sell more tickets and grow profitably.

CapMan Russia first started first negotiations with the company when their newest concept “Kidburg”, a city of professions, had been up and running for a year. In 2014, Kidburg already offered three formats: Skazkin Dom, an interactive theatre-museum (previously house of fairy tales); LabirintUm, an interactive museum of recreational sciences; and Kidburg, a children’s city of professions. Today, all three concepts work under the name Kidburg.

Even though Kidburg was a small company with little structure and formalities, it was an interesting concept to develop further as it was the first Russian operator with a systematic approach to edutainment, a promising and fast growing market niche all over the world and in Russia. In addition, Kidburg had an experienced management with relevant practical and retail knowledge,” comments Alberto Morandi, Partner at CapMan Russia and responsible for the investment.

In 2014, CapMan Russia acquired a 40% stake in the company with an aim to further expand the company’s operations in Russia.

Even though Kidburg was a small company with little structure and formalities, it was an interesting concept to develop further as it was the first Russian operator with a systematic approach to edutainment

Edutainment – a promising niche market growing fast in Russia and all over the world

Kidburg provides children’s educational entertainment services, referred to as edutainment, which is a niche business area of family entertainment. The so-called eEdutainment market is growing fast in Russia and there is a large number of different activities available for children, both physical and intellectual. Kidburg concentrates in the intellectual entertainment segment. Kidburg’s three concepts are targeted to children between the ages of 2 and 14 years old of age. There is something for everyone: tThe city of professions is aimed for at children between 5 and 12 years old of age and the scientific museum can be also be rented for corporate events. The edutainment market still has limited competition, especially in the regions.

The owners are fighting to get the best entertainment in their own shopping centres, which makes it an interesting situation for us

Edutainment had become an attractive anchor for the developers and owners of large shopping malls' developers and owners. Local shopping centres are very interested in Kidburg’s concept, as the shopping culture in Russia has changed a lot.

Before people came there to shop and after that to eat – now it is the other way around. Entertainment is the primary reason for people to come to shopping centres, and shopping is a nice extra. The owners are fighting to get the best entertainment in their own shopping centres, which makes it an interesting situation for us,” comments Alberto Morandi.

CapMan Russia is supporting Kidburg’s fast growth in many ways

Kidburg’s main target is to growth to become the largest edutainment provider in Russia. The market is growing fast and the goal is to grow at least as much.

Another important target is to work on the formats – the company is currently testing small centers in smaller Russian cities with a franchising format. The Kidburg concept is easy to diversify, which is a clear asset compared to bigger international competitors. We can test which concept works best in the market”, comments Alberto Morandi.

Two new Kidburgs haves been opened in at the end of 2015:, a small 2000-square-metre version of 2000 square-meters in Moscow Region (Zelenograd) and another in St. Petersburg. In addition, a new Kidburg location in Moscow is planned for to opening in April 2016 and a new contract has been signed with Mega (IKEA) to open another Kidburg in Nizny Novgorod in September 2016. Today, Kidburg has 14 centres in different locations and the target is to further expand its presence. Furthermore, Kidburg plans to open a franchising format in Prague to test how the concept would work outside Russia.

The Kidburg concept is easy to diversify, which is a clear asset compared to bigger international competitors

In addition, many corporate governance improvements have been made, including monthly and quarterly reporting in IFRS format, strengthening of the role of the Board of Directors role with a division into sub-committees with clear practical goals, and new, experienced key persons have been recruited in the company. Kidburg is also considering another capital round from private equity funds due to its rapid growth.

Main goals achieved:

  • 7 new location  opened since investment
  • Sales grew by 75% in RUR in 2015

 

Investment: 2014

Turnover: 19,355,125 e

Personnel: 373

Reporting year: 2017

Website: www.kidburg.ru

Net sales development
€million

EBITDA
€million