Although based in New Zealand and offering cloud-based services, in some respects Kim Dotcom's Mega looks more like the US-based social media companies than the other local technology growth companies.

Mega is building customer numbers by offering an attractive free file storage and encryption service.

Chief executive Stephen Hall says for now Mega is focused on growth rather than earning immediate revenue: "We're burning cash current, but once we hit critical mass we will roll out other revenue-based services".

At present the company operates on the so-called "freemium" model. Customers get so much file storage for free; if they want more they can pay a subscription. Only a few customers pay money today, but Hall says that will change.


He says capital raising isn't planned as the company prepares for a backdoor listing on the NZX through TRS.

He says the company already has substantial funding on hand from investors in New Zealand and from overseas. However: "Like all early stage companies we may need to raise additional capital later, but we have no plans to do so at this time".

Mega's appearance on the NZX was originally scheduled for the end of May, but Hall says the date has now been set for June 30.

He says the threat of a regulatory brake on the listing has passed and the company is now working through the process. "We have to develop a profile, that's like a prospectus. The document is at an advanced stage.

"We also need to prepare an independent report for shareholders. Simmons Corporate finance is handling the document; it's not a valuation but will provide shareholders with a suggested course of action. That is also at an advanced stage."

The business is no stranger to controversy, Mega was born from the ashes of Kim Dotcom's Megaupload after the file serving - some say copyright piracy - operation was put out of business following raids in January 2012.

Snakk Media

In April 2013 NZAX-listed Snakk Media went back to investors looking for $2 million of fresh capital. CEO Mark Ryan says the company had a large number of shareholders, but little liquidity so it offered shares at a 20 per cent discount and talked to its high net worth investors.

More than 1200 investors applied to take part and the company received a total of $7.5 million. Snakk scaled back the applications and found an additional $600,000 through a private placement to raise a total of $6.5 million.

Snakk was co-founded by Derek Handley of The Hyperfactory. In Ryan's words: "Snakk provides the plumbing to sell advertising across multiple mobile platforms". In effect it sells mobile advertising for larger organisations, taking a small fee each time an ad is served. It runs campaigns on social media services like Facebook and Twitter.

Ryan says Snakk has a strong balance sheet, is growing at 83 per cent year-on-year and advertising revenue is climbing faster than Facebook's or Twitter's. He jokes that at the current burn rate, money raised from investors will last until February 2021 so long as he maintains the status quo. However, that's not the plan. Some money will likely be used to fund the acquisition of another business or unique technology, but the bulk will be spent on expansion.

Snakk's business is mainly in Australia and NZ. Ryan says the next stage is Southeast Asia, with 80 to 130 million potential customers. He says they are substantially different to those in Australia and NZ because: "There's no such thing as a second screen. They do everything through mobiles. That makes them a very different advertising proposition".