US investors back BlackStar

BELFAST-based BlackStar, has secured a £3.8 million international investment that will create 75 new jobs over the next six months.

Since its formation BlackStar has captured a clear lead in the UK e-commerce market over the past 18-months to become the UK’s largest internet video and DVD retailer.,

The investment from Atlas Venture Ltd and a group of Texas investors will be used to fund infrastructure and marketing initiatives to propel BlackStar onto the world e-commerce stage.

The company has also revealed plans to become a public limited company, floating on the London stock exchange or NASDAQ within 12 to 18 months.

Darryl Collins, one of three founding directors of BlackStar said: “The new finance recognises the success of our business model, brings heavyweight investors to our board and positions us for aggressive growth.

“We have grown to have a significant customer base in 95 countries and for the sort of competition we are likely to face in the future, we need to have a war chest to take on all comers.”

BlackStar’s main competition comes from the high street. However as BlackStar’s director Jeremy Glover insisted the company is revolutionising the way peoples shop for videos.

“If you look at high street stores they carry 5 per cent of what is actually currently available and so it is very restricting by shelf size and not everyone lives close to a Virgin or an HMV store,” he said.

BlackStar offers more than 50,000 videos and DVDs in its online store at www.blackstar.co.uk. This compares with the 2,500 typically stocked by a high street retailer.

As an early stage internet firm, BlackStar is in the unusual position of generating actual revenue and profit, with revenues growing more than 30 per cent month-on-month since their launch early in 1998.

Online purchases in Western Europe, which accounts for 70 per cent of BlackStar’s current market, is predicted by Fletcher Research to grow to over $18 billion by 2004.

Although BlackStar will maintain their Belfast distribution base, it will also be setting up a new sales and marketing office in London.

The reasoning for the expansion to London is twofold. “It is getting close to the film distribution companies and it is also building relationships with the media in general,” said Mr Glover

The jobs will be in a wide range of areas including graphic designers, programmers, pickers and packers, customer service, administration, finance and fulfilment with recruitment ongoing.

Atlas Venture is an international technology and e-commerce venture capital firm which has invested in companies such as Confetti and Egroups.

The Texas investor group includes members of the Texas Pacific Group who have been especially active in Europe with significant investments including Virgin Entertainment.

“BlackStar is one of the very few Internet start-ups in either the US or Europe that is generating real income. In fact its balance sheet looks more like that of a traditional retailer than an Internet start-up. Through its obsession with customer fulfilment and satisfaction, the company has a strong lead in a fast growing market niche,” said Vic Morris of Atlas Venture.

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