Unless you’re a teenage girl, you’re likely not using the video blogging platform Keek. But just because it’s niche (with 85 percent of users being between 13 and 25, and 70 percent of them being female) doesn’t mean Keek is not exceptionally popular, counting some 60 million users up to this month, consistently recording astronomical growth.
The service, which allows members to post and share 36-second long videos called "keeks," has become a favorite of celebrities like the Kardashian family and their legion of young fans. However fast its user base is growing though, the Canada-based Keek has not been bringing in any revenue.
This isn’t always a problem for a young social media start-up (see: Snapchat), but Keek was bleeding money so fast they were in danger of going under completely. The company burned through $30 million from Jan 2012 to August 2013, amouting to the vast majority of their seed money.
To save themselves, Keek has elected to go public far earlier than normal for a start-up and in a most unusual fashion that will definitely change the direction and growth potential of the company, most likely in a negative direction.
Keek made its public debut on the Canadian TSX Venture Exchange via an unusual reverse takeover from Primary Petroleum Corporation, a Canadian oil and gas indie. Primary is sinking at least $2.6 million in free cash into Keek, which should keep them afloat for awhile.
Of course, Keek is now going to have to appeal to the broad market for more cash and is now subject to the trading whims of the penny stock market. This premature debut on the market also shuts the door on a major financing round from angel investors, which could have injected up to $100 million into the fledgling start-up.
So instead of courting Silicon Valley’s elite and playing in the big leagues of tech, Keek has been forced to take a seat at the penny stock kid’s table. It’s not an impossible place to move on from, as previous penny stock “success stories” like True Religion Jeans and BJ’s Restaurant can attest. But it is exceedingly difficult, and does not bode well for Keek’s chances of being a “next big thing” in social media.
As of March 18, Keek was trading on the TSX at 17 cents a share.
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