BC Business
SoMedia Networks | BCBusinessThe SoMedia team in their Mount Pleasant office
Vancouver’s SoMedia Networks Inc. is planning an initial stock offering that it says will be the first Canadian Internet technology debut on the TSX Venture Exchange since 2001.
A retreating resource sector has prompted Canadian investors to explore new opportunities, prompting the B.C. web marketing company to take the road less travelled in Canada’s technology sector—the IPO.
“We haven’t seen many technology IPOs, but many of the companies that are already listed have enjoyed outstanding gains, such as RedKnee, CGI Group, Sandvine and Solium Capital,” says Nick Waddell, founding editor of Cantech Letter, a publication that monitors Canada’s technology stocks. So few Canadian technology companies have made an initial public offering since 2002 because the returns weren’t there, but in 2012 technology finished as the top performing sector on the TSX, he says.
SoMedia Networks builds cloud-based video production platforms that allow small- to medium-sized businesses and enterprises to efficiently and economically create videos for their websites with a focus on SEO and SEM. The company’s workforce management suite standardizes the video production process, lowering the barrier for businesses that want to incorporate online video in to their marketing strategy.The pressure for a higher Google search ranking and to keep potential customers engaged has pushed more small businesses to video, says George Fleming, founder and CEO of SoMedia Networks Inc.
“Technology is dramatically underrepresented, there’s a big catch that needs to take place,” says Fleming. He points to the 1.6 per cent valuation of tech companies on the TSX:V, compared to its pre-Internet bubble peak at 40 per cent in 2000.
Going public in unsaturated space has wrought success for other B.C. tech companies as well. Video surveillance company Avigilon Corp. raised more than $25 million from its IPO in November 2011 and proceeds from a secondary offering in its November 2011 IPO. Its stock has risen up more than 230 per cent since then.
Founded in 2006, SoMedia has raised $12 million from private Canadian angel investors over the past six years.
A final prospectus for the SoMedia IPO will be filed with Canadian securities regulators this week, according to Fleming. The company’s offering is backed by Difference Capital Funding Inc., a Toronto merchant bank which raised $85 million last year to invest in emerging Canadian technology companies.
The funds being raised from the offering will be used to expand SoMedia’s sales and marketing across North America.