BlackStar backed by US venture capitalists

BlackStar, a Northern Ireland-based internet company offering online videos and DVDs, yesterday said it had secured private equity backing from two US venture capital houses and planned to float within 18 months in London or on Nasdaq in the US. Texas Pacific Group, a US venture capital company headed by David Bonderman, the investor, and Atlas Venture are together paying $6m (£3.8m) for a 33 per cent stake in the company.

BlackStar was founded last August by three film enthusiasts and claims to be the UK’s largest online video retailer with 50,000 titles. The company, which has so far invested £200,000, said it was profitable before advertising expenses. Revenues were increasing by 30 per cent a month, with annualised sales of about £10m to customers in 95 countries.

The International Video Federation estimates the size of the UK video and digital video disc market at £1bn. Fletcher Research, the consultancy, has forecast that online video sales in Europe – which accounts for 70 per cent of BlackStar’s current market – will be worth about $18bn by 2004.

The new investment will be used to beef up BlackStar’s marketing effort and improve technology. The group will create 75 jobs over the next six months in Belfast and London. The company’s three founding directors, Jeremy Glover, Darryl Collins and Tony Bowden, bring together film, marketing and internet experience.

Mr Bowden, who studied theology at Queens University in Belfast, developed Ireland’s first internet design agency, which he sold to Anderson Advertising in 1996. Mr Glover, sales and marketing director, worked for 15 years at McCann Erickson, the advertising agency.

“The new finance recognises the success of our business model and positions us for aggressive growth,” said Mr Collins, a film producer.

James Osborne, former senior partner of A&L Goodbody solicitors in Dublin, who has brought a number of Irish companies to the market, is chairman. As a director of Ryanair, he was closely involved in floating the Irish airline, and was instrumental in introducing BlackStar to Mr Bonderman.

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