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Strap Yourself In for a Summer Trill Ride

To our Valued Investors:

At the dawn of the Covid-19 pandemic, people across the globe had a lot of spare time on their hands. They were, by and large, imprisoned in their own homes, left to their own devices. The results were not all bad, though. Families were forced to spend more time together, leading the way for Friday family game nights to make a comeback. With the closure of restaurants, domestic culinary aptitude spiked. Self-taught pianists began to emerge. Long-neglected home improvement projects suddenly received some much-needed attention.

Many people passed the time absorbed in digital entertainment forms. For instance, the sudden and raging popularity of Netflix’s Tiger King most certainly got a boost from the pandemic’s effect of forcing people to find something, anything, to do. The more creative-minded set made their own entertainment, and many of these turned to TikTok as a means of self-expression. TikTok is a social media and video editing platform that permits users to create short-form videos, add a multitude of special effects, and share them with the broad viewing public. Naturally, the internet quickly flooded with millions of TikTok clips. The really good ones went viral, making overnight sensations out of their creators.

Although the app had already been available for download for several years on Apple and Android phones for several years, the newfound popularity attracted concern at the White House. On July 31, 2020, President Trump announced a decision ordering Chinese megacorporation ByteDance to divest its ownership of the application, threatening to shut down TikTok’s U.S. operations through executive action as soon as the next day if the company did not comply. Trump, you see, was troubled with his belief that TikTok had the means to harvest volumes of data from American users and then commit unscrupulous acts with that information. As the situation developed rapidly, Trump announced plans to ban TikTok outright in the United States. The ban threat and Trump’s indication he would oppose any sale to an American buyer was widely protested by TikTok users because, after all, they were severely hooked on the app at this point. Many users argued that national security concerns were being used as a cover by the administration to justify a ban as retaliation for pranks and satirical material aimed at Trump by TikTok users.

The threat stood, though, and some American corporations saw an opportunity. Microsoft struck a preliminary deal to buy an interest in TikTok and to assume the app’s data management responsibilities. Next, Oracle pitched its hat into the ring. Before either one of those deals could gain meaningful traction, though, a volley of legal moves obstructed the executive order and made a ton of well-paid lawyers even wealthier. In the end, in late September 2020, TikTok filed a request for a preliminary injunction with the District Court for the District of Columbia to prevent the app from being banned. The injunction was approved by justice Carl J. Nichols. Today, TikTok continues to operate freely in our land, with the perceived safety of an entirely new presidential administration. The victory is not a comprehensive one, though. Just over a year ago, India imposed its own TikTok ban, and it took. That country’s Ministry of Electronics and Information Technology prohibited TikTok, along with 223 other Chinese-owned apps, after they were deemed prejudicial to India’s sovereignty and integrity. Losing the Indian market is a painful blow to ByteDance’s bottom line.

Other challenges exist for TikTok. Most notable is the emergence of competition from a similar video editing program called Triller. Initially released in 2015, Triller also provides the opportunity for users to explore their creative sides by producing and sharing imaginative short pieces, including videos set to music, or automatically synchronized to music, using artificial intelligence technology. What’s more, Triller has access to an astounding catalogue of tunes, a feature sorely missing from TikTok. Last August, the company partnered with business-to-business music company 7digital, providing Triller with access to 80 million tracks and automatically reporting usage data to Sony Music, Warner Music Group, Universal Music Group, and Merlin Network. They have also signed licensing deals with the rights societies PRS for Music, GEMA, STIM and IMRO, and the publishers Concord, Downtown and Peermusic. This allows Triller to let its users create entire music videos, start-to-finish, which is something that TikTok is yet unable to achieve. Notably, the difficulties that confronted TikTok in the United States and in India last summer launched Triller to the #1 spot in free app rankings. Triller’s exposure was undeniably game-changing and permanent.

At Iron Edge VC, our function is not to persuade clients to choose one video sharing technique over another. Quite frankly, it’s simply way out of our field of expertise. Our efforts in evaluating pre-IPO investment opportunities leaves us with little time to star in hip-hop videos that we can share with our friends. The TikTok vs. Triller saga, though, has captured our attention for much more appropriate reasons that should be obvious to those who have paid attention to our weekly newsletters. In Beware the Unfettered Valuation (May 12, 2021) we cautioned that sky-high price tags on private companies have a tendency to creep up silently, and they can wind up stinging investors with a rude wake-up call. As of last October, Triller had raised $100 million at a $1.25 billion valuation. ByteDance, on the other hand, is currently offered in the second market at a heart-stopping $400 billion valuation. In We’ll Sit This Calamity Out (July 14, 2021), we told of how we wisely chose to walk away from an investment in DiDi Chuxing because of the Chinese Communist Party’s unpredictable behavior, and of how our hesitation was resoundingly justified immediately after DiDi’s public debut. ByteDance is, of course, based in Beijing, while Triller hails from good ol’ Los Angeles. By no means do we intend to disparage a company or a government simply on the basis of their nationality, nor are we trying to appeal to any investor’s sense of patriotism. The point is that we at Iron Edge VC, with a tendency to lean into straightforward and reliable familiarity, have found great comfort in Triller’s potential for providing uncomplicated returns for those who have the opportunity to grab a piece of this innovative company today.

  Triller is a company that we believe has its best days ahead, even considering the remarkable progress they have made in only six years. Although talk of an IPO on the horizon has begun to percolate, Triller’s shares are not yet for sale in the public markets. Your friends at Iron Edge VC can get you in through the front door and give you access, nonetheless, through our pre-IPO investment funds. Our inventory is priced at a very attractive valuation for now, but the uptick in visibility could change this quickly. If you would like to learn more, or if you know of anybody else who would, please do not hesitate to contact us by clicking “Get in Touch” below.

If you have enjoyed this article, visit the Iron Edge Blog for past updates on other pre-IPO investment opportunities.

 As always, shares are available on a first come, first served basis.

All the Best,

Paul Maguire
Founder & Managing Partner

5f6e0d464e388c4975685025 Paul Min

Paul Maguire

Founder And Managing Partner