In raising his US$2.85mil seed round for Durioo+, Sinan Ismail becomes a startup poster boy

• Failing, learning, relearning over 13 years, made him founder he is today
• Targeting 100mil Muslim families with children aged from 1 to 12 years

The soft spoken, pony tailed, hoodie clad (strictly orange from now on) Sinan Ismail, founder of children’s Islamic content startup, Durioo Sdn Bhd, having raised US$2.85 million (RM12.5 million) in a seed round that was announced on 1^st March, has just made himself the Southeast Asian poster boy for the investor belief that there is a de-risking element when investing in a founder who is onto his next venture.

Ask Jared Friedman, Partner at Y-Combinator, who in a call with Sinan in Dec 2021 to welcome him into its Winter 2022 cohort, rendered Sinan speechless with his opening remarks. “Congratulations, your application was one of the most unusual but most interesting I've ever read. And I've read more than 10,000 applications since I've been here.”

For one there is the experience gained over the journey and networks built that helps the founder avoid mistakes made, identify the right talent and better spot the next opportunity.

Sinan ticks all the boxes.

He built his first company, Digital Durian, a children’s animation production house with co-founder Hairul Faizal Izwan, into a 6 billion cumulative views content creator, with minimum fuss and fanfare over a 13 year period. But he does not consider it a success as cash flow was always tight and making payroll, stressful.

Sinan, a University Science Malaysia, math major, started his journey in 2009 by offering multimedia services, shooting wedding videos (just like Kamarul A Muhamed founder of Aerodyne Group) and doing some trading before he settled on animation.

The ups and downs have made him a better leader and entrepreneur, he believes.

“My whole entrepreneurship learning has been through Digital Durian. From talent management, running a company, animation knowledge, culture building, marketing and branding. By doing, failing, learning, and relearning over those 13 years, I believe, has made me the founder I am today. That has been built into Durioo and I think it is a positive,” he tells Digital News Asia.

That journey, over which time he has built a top class animation team, is what allowed him to start Durioo with a team of 45 highly experienced creators who left Digital Durian to join him in Jan 2022. This strong footing for an animation startup, is what allowed him to close his large (by Malaysian standards) seed round by Oct 2022 – eight months after launch and which was announced 1^st March.

Switching his attention away from Digital Durian (which he is still owns and is run by a team of less than 10) to launch Durioo, which operates as Durioo+ in the market, was an easy decision for Sinan who outlines the three key differences between the two companies.

[Ed: Para edited for accuracy.]

1. Business model

Digital Durian is animation production company and in the past two years the business model was failing and in the red due to Covid and changes to YouTube’s policy on children's channels in 2020 where Digital Durian saw a drastic drop in revenue of up to 70%.

Out of that bitter lesson (that if you don’t own the platform, you are at the mercy of the whims and fancies of the platform owner) comes Durioo+ a streaming platform with a subscription based model with huge growth potential in the Islamic market, augmented by merchandising opportunities and launching Durioo Games through collaborations with animation studios, production houses, and game companies.

2. Mindset and scale of ambition

The mindset and DNA of the companies are very different. Sinan candidly describes Digital Durian as a barely surviving production house while Durioo+ is a new tech startup with the potential and ambition to become a unicorn.

“I wanted to start fresh with a new founding team that believed we could become a unicorn. This is core to the DNA of the new startup.”

3. Mission

Digital Durian's mission was to make people happy but Durioo+ is a purpose driven startup aiming to create rich, engaging, stimulating, fun Islamic guided content for Muslim children globally. “We are building a safe platform targeted to Muslim children aiming to build character of eeman (faith), alhlaq (ethics) and ilm (knowledge),” says Sinan who had observed with growing alarm over the years at how algorithms were pushing content for children that was actually ill-suited and how a liberal interpretation of children’s values was increasingly putting such content at adds with Islamic values.

Early traction has seen it hit 22,000 paid subscribers, with 99% from Malaysia as its marketing efforts have been focused there for now. But the ambition is greater - Durioo+ aims to hit 100,000 subscribers by end 2023 and 1 million by 2026 as it builds a path towards its unicorn goal.

A range of investors seem to think Sinan is on to something. Aside from Y Combinator, other investors include Gobi Partners, Uncommon Capital, Lynett Capital, New Venture Order (NVO), and Innate Capital, with a number of angel investors consisting of unicorn founders and employees of established global companies, such as Google, Meta, and IQIYI, also backing Sinan.

They are betting that Sinan and Durioo+ can keep up its torrid pace of quality original content creation. Powered by a team that has grown to 65 now and working with some outsourced partners and freelancers, Sinan shared that of the 20 original content created, five are animations with three being co-productions with other studios.  

The other 15 are Durioo Non Animated or live action content which is cheaper to produce. “These are more experimental and low budget but we try to make them as impactful as possible,” he says, adding, “the team is doing an excellent job and together we are creating great Durioo+ originals.”

One big advantage of creating original content and owning the IP (intellectual Property) is the opportunity to create merchandising revenue streams. And Sinan has big plans with 27 strategic partnerships signed, some for merchandising deals. “In the next few months, you will see 10 different Durioo+ products hitting the market,” he says, including diapers, apparels and multivitamins.

But it’s not just about the money, he contends. “We aspire to create value and experiences beyond the screen. The children can get more benefit from us and we can build a deeper relationship with them through our merchandise, which will always be aligned with our Islamic values.”

That may be so, but the specific market Sinan is targeting is substantial. With 2 billion Muslims in the world, Sinan is targeting 100 million Muslim families with children aged one to 12. “Assuming they pay a US$3 subscription every month, you're looking at a US$3.6 billion potential subscription revenue a year,” he says.

[RM1 = US$0.223]

While he is chasing that market, Sinan is also working with Malaysian Digital Economy Corporation (MDEC) to strengthen the Malaysian digital animation ecosystem by becoming a mentor for the Digital Content Creators Challenge (DC3) and exploring opportunities for collaboration and partnership with Malaysian creative content companies.