EDMO , SEC & NGI Start Intial Public Offering Discussions
By: Carter Allegrant
The Second Life Capital Exchange announced on May 25th that three new companies were being considered by the board of directors to see whether they would be allowed to issue their initial public offerings to shareholders. Each of the companies published its prospectus in the exchange forums in order to let traders see what they had to offer and after through analysis I have to say all three have good deal of potential. The fact that we are getting three new companies all at once also shows the continuing progress made by the investment market and the increased level of confidence in publicly traded companies. Considering that last week EARN’s IPO raised L$3,750,000 ( 15’000 USD) from investors I believe these three new companies are going public at just the right time with trader’s confidence in an all time high and that if the current trend continues they will sell out their shares pretty fast.
Although this interest in the markets and readiness to invest on part of the traders its good and it shows we are on the right path to building a better trading platform we should all be cautious of keeping the market volume growth sustainable. Right now Initial Public Offerings are selling very fast, often within a week or two, and that shows that investors are making quick decisions when it comes to trading based on the published prospectus of the company and not necessarily in solid market research in-world.
That is why I always urge the readers of this magazine to take the time to make careful investment choices and the all the homework associated with making a big investment. That means spending time in Second Life checking the state of the industry in which you plan to invest, analyzing the competition, comparing earnings, and seeing how much demand there is out there for the specific product or service. That type of analysis should take at least a week or two to fully come together and be a good way of assessing market trends.
Now some of you may ask what would be the negative impact of exponential volume growth and all I can say to that is growth has to be controlled to a certain extent in order not to tap out the current amount of traders, if there are more IPOS than new investors the overall demand for shares and the supply of investment funds are bound to decrease making it harder for new companies to effectively use the market. This can limited if traders take enough time to research the company of their choice before and investing and also by keeping a limit on the amount of IPOs that can start all at once. That said lets talk about the three companies coming to a IPO near you soon:
I. ( CAPEX- SEC) SecondNights.com: Second Nights is a premier company which provides entertainment options for couples looking to have a good time. It plans to raise 2’000’000L from shareholders and use them to empower their staff and attract sponsors, which they plan to do by building a larger in-world presence with land in which to showcase their their packages and through special events, banners and advertising partnerships. Now even though I think the use of capital category is pretty ambiguous and not detailed enough one must admit that the project is quite innovative in nature and if it can be carried to fruition the potential profits will not be insubstantial. It is worth noting that many entertainment companies in the past have had problems such as Metaverse Broadcasting Company which didn’t do too well financially but then again they weren’t quite like this one and I think the niche of this company is big enough to be exploited.
II. (CAPEX-NGI) Next Gen Inc: This new company is much more modest asking for only 800’000L of investors and it focuses in uniting second life avatars creating families. They have a established brand that is currently running to full regions a clear sign that revenue has been stable enough to support a huge tier. Business plan wise the company seems solid enough and they have clear goals. However I do wish they would have elaborated more on the use of capital which merely says “To continue reinvesting in the business with advertising and to branch out with our Affiliate/Franchise “Next Gen Inc. Too”. Open and operate Mainland High School. We also plan to explore other virtual worlds. ” this category should include a list of how much money is required and for what and not be so broad. My advice is to invest conservatively on this company since it does have potential but also meet with the management team and ask questions about any doubts you may have.
III. (CAPEX-EDMO) Edmose Group : The Edmose Group plans to raise 1’200’000L in order to expand and enhance its current services which range from machinima to publishing and three dimensional modeling. The use of capital section although ambiguous does give some estimates as to how much much is going to be spend in each area which is good for letting investors know what they should look into. I believe the company has good bones and that the chief executive officer is a capable man who already runs a business in-world and I recommend to everyone buying some shares after doing some research in the company and making sure its right for you. This may not be a right pick if your portfolio is already too tied up in services in which case I would recommend you get shares from content provider company such as GAP or EVO.
With these three companies comes a demand for 4’000’000L from investors which if we had to the demand for EARN we get 7’750’000L or roughly 31’000 USD. Now the question is can the supply of loanable funds from the investors satisfy that huge monthly demand? I certainly hope so but I think if the exchange continues to experience these rate of growth serious expenses need to be made toward increasing the number of users. This should be done by resorting to real life advertisement in international magazines and news publications otherwise we will experience a problem in the long run.
Looking forward to hearing your thoughts,