New Investment Recognises that UK Internet Start-up is Building a Real Business on the Web
The UK’s largest Internet video and DVD retailer, BlackStar<www.blackstar.co.uk> today announced that it has secured second round funding of $6 million (£3.8m) from Atlas Venture Ltd and a group of Texas investors.
BlackStar will use the new investment to fund infrastructure and marketing initiatives to propel itself onto the world e-commerce stage and prepare for future competition from established High Street and online retailers. The company expects to create 75 jobs over the next six months in offices in Belfast and London.
BlackStar’s management is looking to take the company public either on the London Stock Exchange or NASDAQ in a 12 to 18 month timeframe.
As an early stage Internet firm, BlackStar is in the unusual position of generating actual revenue and profit based on its business model of offering greater choice to the consumer, total customer satisfaction, sophisticated customer marketing and low overheads.
Atlas Venture is a technology and e-commerce venture capital firm having invested in companies such as Confetti, Moreover and EGroups. The Texas investor group includes David Bonderman, James Coulter and William Price, founding partners of Texas Pacific Group. The partners of TPG have been especially active in Europe with significant investments including Virgin Entertainment, Punch Taverns and Ducati motorcycles.
BlackStar has consistently enjoyed revenue growth of more than 30 per cent month-on-month and currently has customers in 95 countries.
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. The video and DVD retail market in the UK is currently valued at around £1 billion per year by the International Video Federation.
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.
"My partners and I are excited about investing in Black Star, an early leader in the e-commerce arena," said James G. Coulter, founding partner, Texas Pacific Group. "Black Star’s sophisticated management team has positioned the company well for continued growth."
"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 fulfillment and satisfaction, the company has a strong lead in a fast growing market niche," said Vic Morris of Atlas Venture.
"Which ever measurement criterion you choose to use, BlackStar has captured a clear lead in the UK market in 18-months, selling videos and DVDs over the Internet. The new finance recognises the success of our business model, brings heavyweight investors to our board and positions us for aggressive growth," said Darryl Collins, founding director, Black Star.
BlackStar’s three founding directors bring together film industry, marketing and Internet expertise. Darryl Collins, responsible for commercial operations has 15 years experience working in the film industry. He produced a series of award winning commercials and an international award-winning feature film.
Jeremy Glover, responsible for sales and marketing spent 15 years in the advertising industry, latterly as creative director of McCann-Erickson Belfast, creating award winning campaigns for many well know national retail brands.
Tony Bowden, a theologian by training, leads the strategic direction of BlackStar’s Web site. He developed Ireland’s first Internet design agency prior to founding BlackStar. The company’s chairman James Osborne, former managing partner of Ireland’s largest law firm A&L Goodbody, has steered a number of Irish and International business deals, most recently the flotation of Ryanair.
Following the new investment BlackStar’s founders Jeremy Glover, Darryl Collins and Tony Bowden will remain as full time directors of the company, while James Osborne retains the position of chairman. Vic Morris of Atlas Venture will join the board as a non-executive director. The partners of TPG have appointed Dipanjan Deb as their representative on the board as a non-executive director.
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