LX Ventures (TSXV:LXV), a sort of junior answer to recent TSX grad Difference Capital, has stirred of late. It has been buoyed, as its management guessed it might be, by the probability that one company in its basket of investments would ripen early.
Shares of LX spiked 16% on announcing the involvement of rapper Romeo (Romeo Miller to his mother, Lil’ Romeo to his older fans) with Mobio Insider, a new fan directed social media content platform developed by wholly-owned LXV subsidiary company Mobio.
The uptick was surprising as well, immediately following a 25% spike for a similar announcement regarding reality TV baddie Scott Disick, who brings a Klout score propped up by his 3.6-million strong Twitter army and a Kardashian for a wife. That week’s action was capped off by a slight slump in the share price triggered by the selling off of a major stakeholder. All in all, though, LX Ventures continued to surprise through the first week of November, edging upward.
If eyeballs are ultimately dollars, Mobio is off to a roaring start. The company’s celebrity beta testers included Ke$ha, Cher Lloyd and Nashville-based pop act Hot Chelle Rae. In addition, they’ve recently signed up vampire actor Paul Wesley, Sports Illustrated swimsuit model Jessica Gomes, Disney actress Bella Thorne, and Vancouver Island-born superstar Pamela Anderson.
As impressive as that roster sounds for sheer social media blingability, the platform’s user engagement stats are equally eye-popping for anyone with an interest in marketing, with a 35%+ ad unit engagement per consumer compared to the sub-.5% industry standard for banner ads and click-throughs.
The promise of Mobio’s business model lies in its ability to produce a two-way engagement between fans and influencers and/or celebrities, while providing a means for influencers to expand their audience on other social networks while also monetizing content, in the form of photos, videos and written posts.
“The Mobio platform is valuable to influencers from every industry and the addition of Mr. Miller (Romeo), who has a diverse and impressive background, shows that the market agrees,” said Mike Edwards, LX Ventures CEO.
Canada’s long wished for sector rotation has already seen the S&P/TSX Capped Information Technology Index pushed 27% higher this year, while investors seek alternatives to the traditionally robust but recently sluggish resource sector.
After the collapse of the tech bubble a dozen years ago, a moment during which the tech sector accounted for 28% of the TSX, investors retreated to the perceived safe investments, such as mining and resources, while tech’s share in the TSX plunged to a mere 3%. In recent years, though, the tech sector seems on a rebound. Even the more staid CGI Group, OpenText, Celestica, Constellation Software and Macdonald Dettwiler are up sharply.
In an interview earlier this year with Cantech’s Nick Waddell, LX Ventures’ CEO Mike Edwards characterized the particular moment we are in.
“Much of the pure venture capital in Canada is put to work in the junior stock markets, and for about the last decade most of this capital has been ploughed into the resource sector,” he said. “We are seeing a big pullback in this sector and much more interest in others including technology. We think our timing is perfect as the best performing sector (in terms of share price appreciation) on the TSX in 2012 was technology and it was the fast growing segment of new listings on the TSX Venture Exchange.”
Since that interview in April of this year, LX Ventures has completed two wholly owned acquisitions, Sosido (a knowledge exchange network for healthcare professionals) and Mobio, and has worked on the development of Mobio’s business model and building its profile in advance of the INsider launch.
Meanwhile, LX Ventures has added a President to its team, appointing Bernd Petak on October 23. He thinks the company is still in the early innings of the game.
“While LX Ventures has made considerable progress, I believe the company is still in its infancy and I am convinced it has a high-value future in the growing tech sector,” said Petak. “I consider the potential for our portfolio companies Mobio and Sosido to be unparalleled and I intend to focus on moving them ahead as quickly as capital allows us to do so. We will also continue to develop opportunities to add attractive revenue generating assets to our portfolio of disruptive technologies.”