Kondoot social network plans $10 million IPO

news Australian video social network Kondoot has announced plans to launch an Initial Public Offering (IPO) in a bid to raise $10 million for its marketing and expansion plans.

According to a prospectus issued by the company and available online Kondoot is offering 83,333,334 shares at 12 cents each, with the prospectus having been lodged with the Australian Securities and Investment Commission (ASIC) for the public issue. All applications for shares under the Prospectus would have to be for a minimum of 16,667 shares ($2,000).

Founded by University of Queensland Information Technology graduates Mark Cracknell, 21, and Nathan Hoad, 25, Kondoot is an integrated social networking site, with live video streaming which enables celebrities and general users to publish live and recorded broadcasts as well as video chat and use instant messaging.

The company claims to have developed the world’s first successful social live video platform to enable friends, family and followers to communicate via live video, at no charge. For those looking at making money using social networks, Kondoot also offers the possibility of charging a fee for access to a video stream, allowing record companies to sell tickets for a gig, or public speakers to sell tickets to their presentations online.

Kondoot has established itself as a global network with users in over 135 countries. Although its initial focus is on American and Australian markets, the company maintains that it is already off to a flying start in South East Asia, and intends to boost its European presence.

The company founders were very positive about the possibilities of Kondoot on the world stage because of its diverse capability, and its acting as a central, combined platform, as well as several anticipated revenue streams. They looked forward to sharing the many opportunities their company had to offer with new investors. Cracknell, Co-Founder and Executive Director, said: “Kondoot has developed a unique concept that we believe has the potential to change the way the world communicates, opening up huge opportunities in areas of promotion, education and sharing personal moments with friends and family around the world.”

Co-Founder and Executive Director Hoad also commented on Kondoot’s unique features: “The Kondoot team has created the world’s first integrated, social live video platform that will completely revolutionise the way people communicate, broadcast and interact with each other.”

The company media release said that experts in the United States had already declared live social video as the next big trend in social media, adding that Kondoot was well-positioned to become the world’s premier platform for face to face communication. According to the Kondoot prospectus, working with a variety of technologies and developing their own unique systems had enabled Kondoot to support large scale live and recorded video delivery to masses of users. The Kondoot team was committed to building new features to entertain existing dedicated users and attract new users.

opinion/analysis
To be honest there’s a lot about Kondoot that I find a bit questionable. If you read through the company’s prospectus, you will no doubt quickly reach the conclusion that the company is attempting to hype itself up dramatically, while not providing a lot of financial details about its operation. For example, how are we to examine the following statement?

“Kondoot has not included revenue forecasts in this Prospectus due to the Board’s conservative outlook and the unpredictable nature of the social network space. Typically, social networks are not able to generate enough revenue to become profitable in the first three years of operation. These initial years are focused on building traffic and user base, as this is what traditionally makes a social network valuable.”

Riiiight. The company is filing for an IPO, without making any revenue forecasts. Great. This is followed by several paragraphs comparing Kondoot to the success of giant US dot com firms such as Facebook and Groupon, with the extreme levels of growth that such firms have been able to attract.

Later in the prospectus Kondoot does go into a surface level of detail about its proposed business model, which focuses on advertising (like many startups out there), paid broadcasting and virtual goods. It also states that its end goal is to be acquired by another company in the IT space. But nowhere is there much of the needed detail about just how the company plans to recoup its investors’ funds. And this, I would say, is fair disturbing for a startup that wants to raise this amount of capital.

There’s also other weird things about Kondoot. The company’s website is a little amateurish, for starters. The company has retained the services of a professional public relations firm, which is proudly listed on its web site as its media contact, but if you browse through the articles about Kondoot (good examples are here, here and here), you’ll see little detail about its financial plans — just a lot of top level statements about how it’s in the fast-growing social networking space alongside Facebook, Twitter and Google+.

I won’t say that Kondoot can’t back up its statements. The company clearly has some business and technical smarts, and has some runs on the board. But the company does fit the definition of ‘dot com hype’ rather precisely. I will be very interesting to see if it can deliver on its promises of global expansion, or whether much of what is surrounding this company is nothing but hot air. Just saying that you’re a Facebook or Twitter rival does not make it so.

Image credit: Fernando Mengoni, royalty free. Opinion/analysis by Renai LeMay