Unlocking the value of video: Linius discusses $3m capital raise and new product launch

Linius Technologies Limited (ASX:LNU) CEO James Brennan discusses the company's recent capital raise, partnerships with Prime Focus, Magnify and Avid, and the launch of Captivate, a platform that enables broadcasters to offer personalised video content and compete with social media giants like TikTok and YouTube.

Paul Sanger: I'm Paul Sanger for the Finance News Network, and today I'm talking with Linius Technologies (ASX:LNU). Linius Technologies, trading under the ASX code "LNU", with a market capitalisation of approximately $10m, is dedicated to unlocking the value of the world's video. Linius enables end-users to find, curate and utilise valuable moments from across vast libraries of video, allowing viewers to create an infinite amount of personalised video compilations on the fly, providing the most relevant content to each viewer. Linius's patented Video Virtualisation Engine turns big, bulky video files into lightweight, searchable data that is enriched with AI and machine learning, making it easy and efficient for users to find and share what matters to them. We welcome back Linius CEO James Brennan. James, welcome back.

James Brennan: Good afternoon, Paul. Good to see you again.

Paul Sanger: James, Linius has just secured up to $3m in funding through a combination of equity placement, a convertible note facility and a standby equity facility. Could you walk us through the structure of this capital raising initiative and how the funding will support the company's path towards cashflow break-even by early FY26?

James Brennan: Yeah, it's been a big day for us, Paul. We've been very pleased to be able to come out with this news, share that with our shareholders and potential investors, and it is a larger structure, fairly complex, with a few different moving parts.

So, out of the total of up to $3m, the first $1.5m is secured through a placement and a convertible note. So, roughly half — the exact numbers are in our full ASX announcement, but half of the $1.5m is in a traditional placement with shares to be issued right away, and half of that is in a convertible note. And that convertible note facility, we structured the terms of that, so it's fully written by Linius and subscribed by existing shareholders, people who are well known to us. And that convertible note allows them to convert that investment into shares at different times over the next 24 months.

And then the second $1.5m is available through what's called a standby placement facility. And Linius has at our discretion the ability to call forward that placement opportunity any time over the next 18 months. So, in total, it gives us the aggregate of access to $3 million.

Paul Sanger: Obviously, that first $1.5 is well supported by existing shareholders in Linius.

James Brennan: Correct.

Paul Sanger: And the second part of the capital raise, it's at your discretion whether you act on that via the convertible note, but you have full control whether you decide to go down that pathway or not.

James Brennan: Absolutely. And that one is through a company called Eli Capital. They would be a new investor, a new shareholder in Linius. And, look, we're really, really happy to have gotten this completed. To me, it really shows a significant endorsement of Linius and our strategy by the investors, who obviously can see the opportunity ahead of us and see the potential for Linius.

And the use of these funds, the key thing is that it gets us out of the cycle that we were in of regular capital raises, smaller raises that would go quarter by quarter. This $3m access now really gives us the runway for the management team to put our heads down, focus on driving the business forward, knowing that we've got a substantial runway. We've also taken this opportunity with the release of some products and some partnerships that we may talk about a little bit more, we've been able to restructure the business to take significant cost out of the business. Now that significant developments have been done, we've taken about $1m annual cost out of the business. So, the combination of the funding, the restructure and some of these new go-to-market methods are going to give us that pathway to break even in early FY26.

Paul Sanger: And, aside from that, you also launched a new product today, Captivate. Who is this product aimed at? And what problems is it seeking to solve?

James Brennan: Yeah, we're really excited about Captivate now being available. We've been showing some early concepts of it and talking about it in the market to gauge the reaction and feedback to it. But that product is now available and we're actively selling it to a number of opportunities. And it's really geared towards helping broadcasters solve one of the biggest problems that they face now. They're seeing reduced viewership and reduced revenues, which have really been lost to other engagement apps like YouTube and TikTok and Instagram. Those applications have fundamentally changed the way that viewers are watching video. It's all about, you know, rapid access to short-form video. It's all about engaging with the community and the user themselves generating that content.

So, they're losing viewership to that experience, but broadcasters still have the best content, they still have the great sports, they still have the news and the original programming. So, the holy grail is to combine the experience of a TikTok user interface or a YouTube user interface with the great content of the broadcasters, and that's exactly what we're doing. The broadcasters are getting killed by TikTok and YouTube, and they're screaming for access to something like this. And our technology is really the enabler of that and the only one that can do it because broadcasters can't do it on their own because video is very inefficient. You look at YouTube and TikTok, they've managed to do it because they've got millions of viewers who are creating content for it. So, they're using me and you to create content. The broadcasters, they simply can't employ enough people to create all that content out of their sports and news and entertainment content.

Paul Sanger: So, you're basically giving the broadcasters the ability, you know, for the broadcasters, if you can't beat 'em, join 'em, but the ability to create what TikTok and YouTube are doing, and hopefully those users don't have to go to TikTok and YouTube now to get that kind of snippet of content. They can get it direct from the broadcaster, presented it in a way that…

James Brennan: In their own app, yeah.

Paul Sanger: That I get. Really, really interesting. Certainly from my perspective that's a big deal.

James Brennan: The broadcasters only put a small portion, and the federations are the same, they only put a small portion of their content out on TikTok and YouTube, because once they put it out there, they lose control of it. They effectively… they lose the monetisation, they lose the rights, they make pennies on the dollar in terms of revenue.

Paul Sanger: Correct.

James Brennan: So, they only put out five or ten per cent of what they could put out. So, our product lets them give users access to 100 per cent of their archive. You know, we just did a distribution deal with Cricket Australia where we're now taking their entire archive, combining it with this new product and bringing it straight to the broadcasters. So, cricket fans can literally search every minute of Cricket Australia content back to the 1970s and create their own personalised YouTube experience with it.

So, Captivate is really a platform and a number of APIs that can very easily be used to create that experience by broadcasters, so they then get the best of the YouTube and TikTok experience, combine it with their amazing content. And the great thing is that it collects the data as well. So, one of the big value propositions besides advertising and subscriptions is gathering that data about their users, being able to understand what their preferences are, knowing exactly what they're looking for. The broadcasters attach a dollar to every subscriber. They know that you're worth $100 or a $1,000…

Paul Sanger: Yeah, got you.

James Brennan: ..over your life, and if they can gather your information and understand your preferences, they can drive the value of you as a subscriber.

Paul Sanger: Got you. And over the last six months, you've announced several partnerships with industry leaders such as Prime Focus, Magnify, and Avid. Could you explain how these are expected to scale Linius technology and boost revenues across the $75b global sports broadcasting market?

James Brennan: Yeah, look, the opportunity is tremendous. And, look, a small company like Linius out of Australia, it's impossible for us to tackle a market of that size on our own. So, these partners, they're all leaders in their particular segment of the broadcast industry, and they've all seen how Linius's technology can really drive value out of the archives and push that content directly to the end-user. And they're getting squeezed just like the broadcasters are. They don't sell their technology to YouTube and TikTok, they sell it to broadcasters and federations. So, they see the strategy that we have and the ability for us to bring that content directly to the end-user, highly personalized, they see that as a way to add value to their products as well.

They have huge existing install bases of customers. So, Prime Focus is one of the leading providers to broadcasters. Avid is one of the biggest editing software providers to all the broadcasters and federations. And they're looking to bring innovative new solutions to their customers that solve their problems. And if we can tie our products together with their existing products, that's really what drives the motivation for them. We've got resell and integration capabilities, so their sales teams are going to be out selling Linius products. And they're motivated a little bit by the margin that they'll make on our product, but they're more so motivated by the value that it adds to their product. It adds stickiness, it adds higher value, they can drive more sales of their own existing products. And we, in turn, we get access to a massive sales force that is able to bring our product into customers and drive opportunities faster than we can do on our own.

Paul Sanger: Well, James, a big congratulations to you and the broader team at Linius for securing this funding pathway. And once again…

James Brennan: Thank you.

Paul Sanger: ..thanks for spending the time and sharing that with us today.

James Brennan: Thanks, Paul. Take care.