Smartphone-repair-shop chain Mobile Klinik has raised $27.5-million in a financing round meant to fund the company’s bid to expand to 200 stores across Canada within the next three years.
Toronto-based Mobile Klinik was co-founded in 2015 by a pair of veteran Canadian telecom executives: Ken Campbell, the one-time chief executive officer of startup Wind Mobile (now owned by Shaw Communications Inc. and dubbed Freedom Mobile), and Rob Bruce, the former head of wireless and cable at Rogers Communications Inc. (Entrepreneurs Alain Adam and Naaman Zorub are also co-founders.)
It has since raised $44-million in total funding, including the most recent round, which will be announced on Wednesday, and will open its 50th store on Thursday. Its newest location will be in a Toronto Walmart, part of a pilot project to open five stores with the big-box retailer over the next two months.
The business model is tied to the steadily increasing price of smartphones, which now routinely cost more than $1,000 and play a central role in consumers’ work and personal lives, creating demand for professional and quick repairs. Wireless carriers such as Rogers and Freedom sell the devices but don’t service them, though they often refer customers with broken phones to Mobile Klinik, according to the chain’s CEO Tim McGuire.
“In the old days when phones were $200 each, the carriers would probably give you a new phone. Now that phones are $1,200 or more each, they don’t give you a new phone, they help you find an opportunity to get your phone repaired,” he said. Last year, the company began selling refurbished used handsets, tapping into a consumer desire to get more value for money, akin to buying a used car, Mr. McGuire said.
There are other contenders in the professional smartphone repair market, such as Fixt Wireless Repair, which has locations in the GTA. Mobile Klinik hopes to expand before its competition can, aiming to open 200 stores by 2022.
“There are about 110 really good shopping malls in Canada and ultimately we want to be in every one of them," Mr. McGuire said. “We’re making sure we’re going to be in all the major places before others come and that’s what the new investment supports – the ability to open essentially a store a week until we hit 200.”
Opening each store costs about $200,000, he said, with $150,000 of that going to the cost of the buildout itself and $50,000 invested in inventory, which includes new parts, repair tools, preowned phones and accessories such as cases.
The company said the Canadian Business Growth Fund made a “substantial investment” in this round but did not disclose the amount. Mr. McGuire said other investment funds took part, as well as most of the company’s board of directors, its management team and some of its early-stage investors.
One of those early backers was Nadir Mohamed, CEO of Rogers from 2009 to 2013, and Mr. McGuire said he is “still a valued investor with the company.”
George Rossolatos is chief executive officer of the Canadian Business Growth Fund, which launched a $545-million fund last year with a mandate to invest in Canadian companies across all industries with annual revenue of $5-million.
“The break-it-and-replace-it mode that we’ve gone through in phones I think is changing and this is going to be a catalyst to help that process change,” Mr. Rossolatos told The Globe and Mail.
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