Private Equity News & Analysis

Balderton scores home run with social network

The sale of Bebo, a social networking site, to AOL is another validation of the European venture model, just as investor interest begins to grow.

By
PEI Staff
-
The sale of Bebo, a social networking site, to AOL is another validation of the European venture model, just as investor interest begins to grow.

Balderton Capital, a European venture capital firm, is set to sell its 15.7 percent stake in Bebo, a social networking site, to the online giant AOL. The sale will generate approximately $140 million (€89.9 million), more than nine times the original sum invested.

These returns make Bebo one of the most successful European internet investments of recent years. Another Balderton investment, MySQL, an open source database company, was recently sold to Sun Microsystems for a price of approximately $1 billion.

Balderton Capital, formerly the European arm of US firm Benchmark Capital, was the only institutional investor in Bebo. It provided first-round financing of $15 million in May 2006 to assist Bebo in the development of its business model. Balderton has been Bebo’s strategic partner, assisting the company to become one of the leading networking sites in the UK and Ireland and one of the largest social networks worldwide.

Founded in 2005 in California, Bebo has 11 million unique users in the UK alone, and more than 40 million members in total.

Barry Maloney, one of the partners in Balderton Capital, and a director of Bebo since May 2006, said: “We got involved in an exciting and competitive investment in Bebo because we believed in the social networking space and the fact that Bebo was positioned for exponential growth.  Our expectations for Bebo have been exceeded in a relatively short period of time.”