Accoona Files for $80.5 Million IPO

Accoona, the web & news search engine which also offers an e-commerce service, has filed for an $80.5 million IPO on the heels of its success in e-commerce in North America and its relationship with the China Daily.

Accoona stocks will be traded under the Nasdaq symbol ACNA and although the company has experienced losses over the past two quarters, its revenue is growing each quarter, from $23 million in Q1 06 to $37.5 million in Q1 07.

Accoona’s search engine is powered by a proprietary AI technology, Accoona Artificial Intelligence, but according to its SEC filing, the majority of its business is produced by its ExchancePlace lead generation site.

Here is their business overview from the SEC Filing, an interesting read.

As part of our long-term strategy, we plan to develop and market multiple online-based services for Chinese business professionals in China. In order to capitalize on the opportunities that exist in China, in April 2004 we entered into an agreement that provides for a strategic relationship between us and China Daily Information Company, or CDIC, a subsidiary of China Daily, the largest English language newspaper in China. CDIC owns and operates chinadaily.com.cn, which is generally recognized as the largest English language website in China. CDIC owns 6.9% of our outstanding stock (before giving effect to this offering) and a senior executive of CDIC is a member of our board of directors.

We generate sales revenues from e-commerce, and advertising revenues from ExchangePlace and from search and shopping comparison engines. We operate primarily in North America and, with respect to search, also in China and Europe. To date, substantially all of our revenues have been derived from our e-commerce business in North America. For the year ended December 31, 2005, we generated revenues of $78.2 million, of which $77.9 million was attributable to e-commerce in North America For the year ended December 31, 2006, we generated revenues of $149.2 million of which $147.4 million was attributable to e-commerce in North America. For the three months ended March 31, 2007 we generated revenues of $37.5 million, of which $36.6 million was attributable to e-commerce in North America.

We were founded in February 2004 and commenced commercial operations in December 2004 by launching our North American search site, Accoona.com and Chinese search site, Accoona.cn. Since that time, we have significantly expanded and developed our activities, including by:

• Acquiring our initial e-commerce operations in May 2005 and additional e-commerce operations in April 2006;
• Launching our European search site, Accoona.eu, in June 2006;
• Updating the functionality of our North American search site, Accoona.com, in June and December 2006; and
• Introducing our online-based lead generation business, branded as ExchangePlace, in North America in June 2006.
• Time Magazine named Accoona.com one of the “50 Coolest Websites” in 2006.

Key Features

With the guidance of our experienced management team, we develop and expand Internet sales and marketing applications through patented artificial intelligence search technology, our lead generation bidding system, and our own marketing and sales expertise.

Innovative Lead Generation Product.

We believe ExchangePlace, our proprietary online-based lead generation marketplace, is one of the first U.S. online platforms for directly originated, qualified leads designed to operate across a range of industries on which advertisers bid for leads. ExchangePlace generates leads online and by telephone and operates across an expanding range of industry sectors, from national to local markets. While ExchangePlace has to date focused primarily on the insurance, selected financial services, moving and online education sectors, nationally in some cases and in selected states in others, we intend to expand into additional sectors and geographic regions. From launch in June 2006 through June 30, 2007, we have conducted lead generation campaigns in five different industry sectors.

Key features of ExchangePlace are:

• Bid based pricing — ExchangePlace employs a proprietary online bidding system to determine the price that advertisers pay for leads. ExchangePlace provides a competitive pay-per-lead process for advertisers, yielding real-time true market pricing for customer sales leads. We believe ExchangePlace is one of the only U.S. multi-vertical, online-based lead generation marketplaces employing this model.
• Segmentation — ExchangePlace gives advertisers (i.e., sellers) the flexibility to select their market segment within industry sectors by specifying consumer criteria, and gives consumers (i.e., buyers) the opportunity, by providing requisite relevant data, to receive offers from advertisers expected to meet their needs.
• Verification — ExchangePlace verifies selected information provided by consumers, thus enhancing the quality and increasing the value of the leads to advertisers.
• Flexible revenue model allowing for monetization of lead inventory — We have developed a product offering that includes the sale of qualified lead inventory offline, for example on an exclusive basis, which allows us to enhance the value of the leads we generate.
• Proprietary advantages — ExchangePlace’s model involves numerous patent claims, and investment in technology, which we believe provide significant competitive advantages.

Search engine.

Our search sites now operate in North America, China and Europe and employ our artificial intelligence search technology and patented navigation tools to search our news and business information databases and for general web searches. Our search sites offer innovative features aimed at improving the relevance of search results and at enhancing the overall user experience. The strength of our search engine is primarily attributable to the sophistication of our search technology and our special features, which include:

• Artificial intelligence driven search engine — Our search engine uses proprietary artificial intelligence algorithms to deliver search results by, in effect, analyzing search terms by meaning, and not solely by matching keywords. We believe this technology helps us improve the relevance of our search results.
• Super Target Your Search — This feature provides tools that allow users to refine results, such as by freshness of results, geography, or term emphasis. While a number of other search engines allow users to perform an advanced search as part of, or in order to refine, their initial search, we believe our search refining tools are easier to use and allow users to better identify relevant results.
• “One click” search feature — Our “one click” search feature allows users to view web, business and news results on the same results page, separated by category. Users then have the ability to target searches within our web, business and/or news indices. This combination of content gives users access to a range of information, including our business database, which includes records on both public and privately held companies, enhancing the relevance of the search results.
• Language sensitive search — Our European search site, Accoona.eu, analyses data to determine which search interface language and which data set to present to its users. The search engine recognizes the language of the user’s browser and also recognizes the language of the query and the language of the documents in the various indices. Accoona.eu uses a rule set combining this information to determine the language preference of the user. Accoona.eu then presents search results customized to the language preference, and the navigators are also translated into that language. For example, in the business search, data in the index includes standard industrial classification, or SIC, codes assigned to each business. When Accoona.eu presents this to the user, these business types are translated into the user’s language of preference.

One of the top consumer electronics e-commerce retailers in North America with potential for revenue enhancement and operational efficiencies. Through acquisitions, we have built an e-commerce business that is one of the top 10 consumer-direct electronics retailers in North America by online revenue and one of the top 55 consumer electronics retailers overall. We believe that there is potential to develop cross selling and direct marketing efforts, as well as a flexible customer service model, to enhance revenues. For example, through training and improved website design, we intend to expand our consultative selling process, allowing us to cross-sell and up-sell to more customers. In addition, we believe we can derive efficiencies from the integration of the logistics infrastructure and management functions across the acquired businesses and from the relocation of our e-commerce businesses, completed in the fourth quarter of 2006, to a new and improved facility.

Well positioned to take advantage of growth opportunities in China. We believe there is significant potential for growth in numerous portions of the Internet sector in China and believe we can benefit from the experience of CDIC, one of our principal stockholders and one of the earlier entrants into the Chinese Internet sector:

We have a strategic relationship with CDIC, which is owned by China Daily, a company owned by the Chinese government. A senior executive of CDIC is a member of our board of directors and we are the search partner for CDIC’s chinadaily.com.cn site, which is generally recognized as the largest English language website in China.

Our Chinese language website, Accoona.cn, offers the same search capabilities to Chinese users as our North American search site. We have what we believe is one of the largest free business directories available online with over 42 million unique entries, which include more than 11 million Chinese business records, 13 million North American business records and 18 million European business records. This business directory can be searched for detailed China specific and international business information and we believe is attractive to Chinese business users.

Opportunity for operational and development efficiencies across business lines. Our business lines each operate as a stand alone business, in some cases complementing each of our other business lines, and creating a structure for synergies. For example, our expertise in information technology can be applied across each of our business lines. Our expertise in search can be applied to improve the search capabilities of our e-commerce business and traffic from our search engine can be used to drive users to our other businesses, including to generate leads for ExchangePlace.