Australian-founded live video network Kondoot is about to close a $3.2 million funding round led by US investors, with plans to open a New York office as it hones in on the US market.
Kondoot, founded by Brisbane-based university friends Mark Cracknell and Nathan Hoad, is a social network based on live broadcast, launched in the US in December last year.
The start-up initially did a soft launch in Australia, followed by its US launch, which, according to Cracknell, was “significantly larger and attracted more attention”.
“The Kondoot team made three separate trips to the US over 2011 to research options and the social media market,” Cracknell says.
“[There is a] much larger technological user base in the US, and a public that is more familiar with IT start-ups launching with interesting new concepts.”
The site has already attracted subscribers from more than 130 countries, which use its live and recorded video broadcast options – in addition to an instant messaging service – to communicate with family, friends and colleagues.
Free iPhone and Android apps allow users to broadcast live from almost anywhere. Kondoot’s games can be played online or downloaded onto smartphones.
Kondoot’s key fee generator is its unique broadcasting platform whereby musicians or bands sell online tickets to a live concert via PayPal, allowing fans to virtually attend. The site gets a 20% cut on all ticket sales.
Through both domestic and offshore interest, facilitated by the Australian Small Scale Offerings Board, Kondoot has already raised $800,000, primarily from Australian investors.
“We were looking for the best ways to raise money in Australia,” Cracknell says.
“We decided that ASSOB gave a good mixture of investor protection and confidence without the costs of listing the company publicly on the ASX.”
“ASSOB has been a reliable platform for us and has facilitated the raising. As it is simply a platform, they can offer you minimal support in terms of finding potential investors.”
According to Cracknell, Kondoot is now in the process of closing a $3.2 million funding round.
“Interest in the final $3.2 million [round] has been primarily expressed by US individual investors and larger corporations,” Cracknell says.
“But also, over the past several days, we have [attracted] further interest from Australian investors.”
Ultimately, Kondoot will raise $4 million for a 10% share of the company. The shares have been sold off in three stages.
“For the approximately $800,000 that we have raised, investors have a 3.2% stake in the company,” Cracknell says.
“Now that we are in the third stage of raising, with rounds one and two completed, Kondoot is valued at approximately $45 million.”
The company is planning to open an office in New York in order to push sales in the US, with the IT team expected to relocate in 2012.
“We have decided to be based in New York as there is less competition in the city for the IT talent,” Cracknell says.
“Many of the big players, such as Google and Facebook, have realised this and are expanding their offices. For example, recently Google spent $1.8 billion on a new building in New York.”
“We believe that New York will be better for business, better for IT talent and better for media in the long-term.”
Once the Australian and US markets have been tapped, Koodoot intends to boost its European presence, with an office in London, before diversifying into areas such as sports broadcasting.
“The most important thing for any new start-up or entrepreneur is to know their product, and the market they’re trying to attract, inside and out,” Cracknell says.
“Potential investors will ask countless questions and they need to know what makes their product not just different but superior.”
“For web start-ups specifically, great traffic and great designs are good but an effective monetisation plan makes raising capital far easier.”
This article first appeared on StartupSmart.
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