For Webmedia, the investment provides over £200,000 capital for expansion beyond its current 40-plus staff and spin-off divisions such as WebContent (the group behind recent major Web launches MovieWeb and ComedyWeb) and Netnames (a domain name registration outfit).
With 222,222 shares accompanying the cash transaction, the deal gives WebMedia a notional market value of around £4 million. Co-founder Steve Bowbrick confirmed that Webmedia will look for a public floatation, possibly as early as the first quarter of 1997.
The deal is not the first for Webmedia though. Bigfoot, the US-based global E-mail directory service provider, holds a five per cent stake in a deal which gave Webmedia a reciprocal five per cent. Webmedia also owns 49 per cent of NetNames US. Both these investments look likely to form the basis of Webmedia's plans to develop a US service.
Webmedia Ltd., the core Web services division of the Webmedia group, will relaunch in October after indications from its 25 clients that more typical agency based functions were required.
For Megalomedia, the acquisition complements its other investments in online companies, most notably Web publisher Cyberia.
PCDN Comment: Initial signs that UK-specific Internet startups are moving towards financial independence. Maturity is still some way off, but this is a start.