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Bebo's VC makes $140 million after AOL sale

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(No, that’s the not the VC, that’s the Bebo founders on holiday). As part of Bebo’s sale to AOL, Balderton Capital, the VC firm that invested less than two years ago in Bebo, is selling its 15.7 stake in the social net to AOL. It will realise about $140 million, a healthy nine times multiple. It invested $15 million in May 2006. In a statement Balderton partner Barry Maloney, 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.” He is “pleased” that Joanna Shields will continue to run the business for AOL.
Elsewhere, VC Fred Destin of Atlas Ventures today blogs that Michael Birch (pictured front right, from his Bebo profile) seemed like” an oustanding founder when I met him. From his strategic management of viral development to his unique product roadmap, Michael had what one might call “purity of vision” in how to develop his service, mixing high end maths with a deep understanding of communities.”

I’d agree with Destin – Bebo’s sale is great news for the European startup scene, as it started in the UK and Ireland and subsequently became a key global player.

He also does some back of the envelope calculations which suggest the sale is not over-priced:

40 Million Uniques
40 page views per user per day
48 billion page views a month
50% monetizable inventory
25% inventory sellout
1 ad per page
€1 average CPM
current monthly revenue €6 million per month ?
potential revenue if fully maximised of €50M per month ?
Optimize even some of these metrics over time and you could easily see €300M of revenues in this business at the current scale.

This does not sound like a dumb buy to me.

Remember, social networks represent 13% of young adults attention but only garner 2% of ad revenues. Whether this is recession proof I do not know, but there is a lot of catching up to do.

  • Scott
  • jas

    This is not a u.k based business it’s an american based business just because one of the founders is british thats about it,they use american spellings and because they could not crack america like facebook and myspace they pretend and the media fall for it to focus on the u.k although they are american run and based.
    Myspace and facebook still lead above them both in the america and in the U.K and thats a fact but not bad for finishing third place $850 million.

  • LawrenceD

    40m members – not 40m uniques per month. And 48bn page views per month? no way. more likely to be a yearly figure

  • http://www.adelph.us william

    What a crime. A robbery and a mockery.
    Will any of the members and content creators for Bebo receive anything for their contribution ? No. The members have created the value with their content and their clicks….and once again they will receive not a dime….and they will be expected to continue this for the next “Owner”….hmmm…Work for free raise the value of a company to 850 million…..how can this be seen as fair….the great web 2.0 share cropping scheme continues to roll….and the media continue to ignore the issue ….Has any and will anyone ask the founders, the VC, or AOL if they are going to give any of the members and content creators pay or equity for there help in raising the value of the company?

    40 Million Uniques
    40 page views per user per day
    48 billion page views a month
    50% monetizable inventory
    25% inventory sellout
    1 ad per page
    €1 average CPM
    current monthly revenue €6 million per month ?
    potential revenue if fully maximised of €50M per month ?

  • Jof

    @William.
    So presumably the Bebo members should be really pissed that they were supplied a service that allowed them to make new friends (for free), discover and view content (for free), express themselves (for free) and basically entertain themselves (for free) for as long as they wanted to be entertained.

    I’m not sticking up for Bebo (I really couldn’t care less either way) but it seems like you want the moon on a stick and then some.

  • Mr P

    @William.
    Grow up.
    They took the initial risk of starting and running the site and offered a great service. All of which was free.

  • Mr P

    Oh William one more thing…
    When your own social network becomes popular and the server and bandwidth costs rise above any revenue you are making, how are you going to raise money to keep it going?

    You could ask your members for a donation, but many may just leave and go to a free site.

  • http://www.broadstuff.com alanp

    I’d say Fred’s numbers are on the “optimistic” side ;-)

    They add up to e72m pa, which given 2007 revenues of c e13m and “management’s guidance” that they would hit $117m in 2009 (ie c Fred’s e72m) makes Fred’s data about right for 2 years hence.

    But, since AOL paid in cash without any earnout or future performance based element in the deal (or none has been reported to my knowlede anyway, there may be one), then they are in effect valuing it at today’s money which makes it at c 43 x 2007 annual revenues.

    Net net, great win for Bebo, but imho it makes AOL look a tad desperate and a tad like dumb money.

  • Damn Skippy

    Hey William, at least the founders of Bebo gave us a crotch shot!

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