LX Ventures (V.LXV) seeks big growth in the cloud computing and social media space

Stockhouse Editorial
2 Comments| March 20, 2014


Deep in the heart of what used to be Vancouver’s skid road district, it’s just past lunchtime on a sunny Wednesday and the technology startup boom is apparently in full swing.

Inside a low rise building on a rapidly gentrifying Hastings Street, dozens of young techies in casual dress are sitting together in rows, tapping away on their laptop computers.

At the centre of this activity, in a spartan third floor office, sits Mike Edwards, Chief Executive Officer of LX Ventures Inc. (TSX: V.LXV, Stock Forum), a fledgling tech company, with big plans to cash in on the cloud computing and social media craze.

At 46, Edwards is no stranger to the world of early stage technology. After quitting university in Ontario to launch his own painting business, he was helping to run a company called Internet Studios in Vancouver, when the tech bubble burst in March, 2000.

He later founded Areaconnect.com, which was sold to Seattle-based Marchex Inc. (NASDAQ: MCHX, Stock Forum) for $17.7 million in 2006.

After dabbling in coffee retailing in Whistler, B.C., he decided to launch LX Ventures in the fall of 2012. The aim was to take public market financing and marry it with early stage technology companies, accelerating their growth, and eventually selling them off.

When Stockhouse stopped by for an interview, LX Ventures had just wrapped up a series of rapid fire acquisitions which have equipped it with four new startups -- Copper.io, Strutta, Sosido and Mobio – at a cost to LX of around $6 million (not including additional earn out provisions for revenue related performance).

The most notable, and apparently successful thus far, has been Mobio, a social interaction platform that allows users to connect directly with celebrities, and earn rewards by asking questions via Facebook Inc. (NASDAQ: FB, Stock Forum) and Twitter Inc. (NYSE: TWTR, Stock Forum).

Edwards said he is excited that the Mobio platform attracted one million page views in a single day last week, up from a million during the entire month of January.

He also has high hopes for both Strutta and Copper, two companies that were acquired last month.

Strutta is a promotions platform that allows brands to create and manage social media contests and sweepstakes to drive leads, create awareness and drive sales.

Copper is a platform that aims to take advantage of the transition from server-based technology to cloud computing by providing tools to computer developers, allowing them to create cloud-based applications and monitor their performance.

The fourth company in the portfolio is Sosido, an information-sharing platform for health care professionals that is funded through sponsorships with brand names in the pharmaceutical sector.

With 35 employees on the payroll, including a development team in Poland, LX Ventures has so far raised $7.6 million from a series of private placement financings. Subscribers were primarily retail investors, leaving insiders with about 20% of the company. Edwards says he is the largest single shareholder, with a 7% stake.
 
Trading at 28 cents on Thursday, LX Ventures has a market cap of $22.6 million, based on 80.7 million shares outstanding. The 52-week range is 96 cents and 14 cents.

While LX Ventures is scheduled to release its fiscal second quarter financial results in early April, it will be July at the earliest before the performance of the firm’s current portfolio is reflected in its results, Edwards said.

“Early stage tech is all about growth,’’ said Edwards, who has recruited a team of experts to help his companies achieve their potential.

Mark Relph, formerly a vice-president of Developer Evangelism with Microsoft Corp. (NASDAQ: MSFT, Stock Forum), is the most recent recruit to LX Ventures’ advisory board.

During the interview, Edwards said it is too early to offer revenue estimates for the portfolio.

However, company officials are hoping that Mobio will be able to sell advertising at the brand level in the near future. “We hope to do that in the next month or so,’’ Edwards said. 

The company is also hoping that Copper might be able to announce an enterprise deal with a brand name client, such as IBM or General Motors Co. (NYSE: GM, Stock Forum).

Edwards was also quick to stress that there is nothing particularly new in any of these ventures. “These are not new businesses,’’ he said. “They are simply businesses which have been re-imagined using technology and the Internet,’’ he said.

Disclosure: LX Ventures is a Stockhouse client.

Tags: TECHNOLOGY CONSUMER CYCLICAL COMPUTER SYSTEMS INTERNET CONTENT & INFORMATION

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cparry
Mentioned at the bottom of the piece..
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March 21, 2014
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PositionTrade
Paid client? not mentioned, and not denied either. Anyway, glad to hear: "However, company officials are hoping that Mobio will be able to sell advertising at the brand level in the near future. “We hope to do that in the next month or so,’’ Edwards said. The company is also hoping that Copper might be able to announce an enterprise deal with a brand name client, such as IBM or General Motors Co. (NYSE: GM, Stock Forum)."
4 stars
March 20, 2014
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