The latest language industry IPO is underway in Korea. Appen-style language data startup Flitto expects to raise around USD 33m in its initial public offering when it begins trading on July 17, 2019.
Flitto was founded in 2012 and is now listing on the development board of Kosdaq, the electronic trading platform of the Korea Exchange. Kosdaq was launched in 1996 and is modelled on the US-based Nasdaq.
The Korean company conducted a demand forecast on July 1 and July 2, 2019, which was oversubscribed more than 1,100 times, garnering interest from 1,300 institutional investors, according to Korean online media.
Kosdaq’s development board offers a route for companies to list on the platform even if they do not as yet meet the requirements for listing on the main board. SMEs in Korea with so-called “promising business models” are granted special dispensation to be able to IPO. Flitto’s listing is, therefore, based on future scalability rather than current profitability.
Flitto is a South Korean language data company that offers crowdsourced translation as well as professional translation services. The platform has upwards of 10 million estimated users. Much of the company’s revenues come from selling text, voice, and image data generated from translation services to data-hungry tech companies such as Microsoft and Baidu. The company also offers subtitling for YouTube content.
Strong Demand, Rapid Growth
There is a big market for selling language data and AI support services to companies that use it to power capabilities such as neural machine translation and image or speech recognition. This market continues to grow as more companies begin to develop solutions that require good quality underlying data for machine learning applications.
Flitto’s revenues have grown rapidly over the past three years in line with this increased demand, rising from USD 0.36m in 2015 to USD 4.4m in 2018. Sales for 2019 are expected to reach USD 6.2m.
As Flitto’s demand forecast has shown, interest from investors in the AI support services market is strong. Moreover, investor confidence in language data trailblazer Appen remains sky-high, with shares in the Australia-listed company doubling from January to the end of June 2019. Appen’s shares have shot up more than 5,000% since its IPO in 2015 and the company’s market cap currently stands north of USD 2bn.