Archive for the ‘Financial Times’ Category

BlackStar deal shows tough e-tailing times

Thursday, July 6th, 2000

BlackStar, the video and DVD online retailer, closed its second-round funding yesterday, but underlined the difficulties facing e-tailers looking for money to take their businesses through to profitability.

The company secured £6m – giving it a valuation of about £20m – from wealthy individuals in Dublin. Darryl Collins, finance director, said: “Most [VCs] were very interested. But it is difficult in this environment where they have overstretched in certain areas.” The scale of the change in fortunes for UK e-tailers is illustrated by the second-round valuation. The second round funds also took nearly three months to raise, compared with less than a month for the first round when Mr Collins said: “VCs were jumping into everything that said internet.”

He said the difficult market conditions meant the company was now ‘not on the IPO trail’. But he said BlackStar hoped to take advantage of any change in investor sentiment on the public markets.

Analysts expect a wave of consolidation among start-up business-to-consumer companies as they come to terms with the new environment where capital is no longer as cheap as at the beginning of the year. Mr Collins said there were no plans to get involved in expected consolidation, although it had talked to a number of companies and was keeping an open mind.

BlackStar backed by US venture capitalists

Thursday, August 19th, 1999

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.