Video game technology company Swarmio Media, which has offices in Halifax, Sydney and the Toronto area, is preparing to go public on the Canadian Securities Exchange in a deal that will raise about $5 million.

The listing represents a pivot from Swarmio’s original plan to go public on the TSX Venture exchange, which the company scuppered in April, 2020 because COVID-19 was driving down stock markets.

Swarmio’s platform is designed to compensate for latency in multi-player online games. When players in different parts of the world are competing against each other, the system is much faster for the player closest to the gaming company’s server, giving them an advantage. Swarmio’s solution is to develop a network of remote servers, so each player is accessing servers the same distance away.

The company filed a prospectus for the listing on June 29. In it, it said it had created a new holding company, Swarmio Media Holdings. Swarmio itself will go public via a reverse acquisition of the holding company.

Instead of a typical Initial Public Offering, or IPO, the holding company has already sold $5 million worth of shares in a private placement -- the sale of stock to a list of pre-selected investors.

The reverse acquisition will cause the number of shares outstanding in the amalgamated Swarmio to increase by almost seven times, compared to the holding company. And options and other derivatives not yet exercised could push that figure even higher. But if those shares were to start trading at the holding company’s private placement price of $0.35, the company would be valued at about $20.7 million. 

According to the trade publication Private Capital Journal, the largest shareholders of the new company will be Swarmio founder Vijai Karthigesu and Nova Scotia venture capital crown corporation Innovacorp, both of which will own more than 10 percent of the business.

Despite its delayed public listing, Swarmio did benefit from the pandemic, with the popularity of online gaming rising during lockdowns.

“It’s an unfortunate situation for the world, but for us it is an opportunity,” said Karthigesu in an interview at the time. “And going forward, things are going to be changing. Our technology optimizes latency and now we’re thinking of making the technology available for other verticals, like voice technology and video conferencing.”

Swarmio’s listing is part of a trend for Atlantic Canadian companies to tap public markets as a key funding source.

As recently as 2018, Entrevestor did not track stock market funding data because it was not significant enough to warrant study. But in 2020, more than a quarter of the $206.2 million of equity capital raised by startups was from four stock market deals.

This year, the largest capital raise so far has been from Dartmouth’s Metamaterial Inc. raking in $198.1 million via a reverse listing on the Nasdaq -- a move that has earned it a multi-billion-dollar market cap and the title of Atlantic Canada’s first publicly traded unicorn.

“There are more viable paths to funding our startups than just the traditional venture capital route,” said Innovacorp Vice President of Investment Andrew Ray in an interview after Metamaterial’s listing. “We view this as another path to financing these companies. And I've already had conversations with some of our portfolio companies, who are asking questions about how this is a super interesting play.”