Social network Bebo recently hired a bank to help sell itself, we were told by a source. However, the San Francisco company responded to a request for comment, saying it hired the bank to help it “potentially” raise another round of funding.
Hiring a bank for financing suggests it wants to raise a significant amount of funding, probably from private equity firms, hedge funds, or other late-stage investors. Bebo’s competitors have deep pockets: Myspace is owned by News Corp., while Facebook recently took $300 million, including $240 million from Microsoft (our coverage).
Our source is somebody closely connected to the merger and acquisition department of a large internet company. However, Bebo says “there is no truth” to word of a sale.
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This is the second tip this week that we’ve gotten about a popular consumer web site bringing in a bank. On Monday, we reported social news site Digg brought in the bank Allen & Company.
Bebo is clearly valuable, whatever its plans. It is a well-run, well-designed and most importantly a large social network that has managed to keep growing despite competition from larger rivals. Bebo had 4.5 million unique monthly US visitors in October, nearly double a year ago, according to Comscore, and it has a large market share in other countries.
Bebo’s typical users are in their teens and early twenties — big users of social networks, as the latest report from the Pew Internet Project shows. The company claims to have 12 million active users in the UK and Ireland, with more than 40 million total users around the world (here). Comscore puts Bebo’s worldwide unique users for October at 21 million, although that number doesn’t include anyone under 15.
Among Bebo’s efforts, it is working with Google, Myspace, and other social networks on Open Social, a software developer platform designed to let third party applications run on any of their sites. Even though that effort is not yet ready, Bebo has not sat still. It has launched a developer platform that’s basically a licensed version of Facebook’s developer platform (our coverage). Facebook is not part of OpenSocial, making Bebo the largest alternative social network where Facebook application developers can run their existing applications.
Bebo lets large media companies do things like run their own video players in the site, featuring their own content and advertising (our coverage). Yesterday, Bebo announced a “wellbeing” platform to help organizations share mental and physical health with Bebo users. Both services target the company’s young user base.
As in Digg’s case, there have been rumors of a Bebo sale for a long time.
A hot rumor in May had Yahoo trying to buy Bebo for $1 billion. August brought the rumor of a purchase by Viacom, including word that the company is looking for a sale “north of a billion.” Company co-founder Michael Birch says he gets purchase offers at least every couple of weeks. We’ve been hearing about rumors of a sale since last year, although the company’s purchase price has kept going up.
Even if Bebo doesn’t plan to sell, there are many large, established media companies without a strong presence on the internet, that may be getting more desperate to buy their way in.
News Corp isn’t satisfied with Myspace. It has also been trying to buy business social network LinkedIn. Microsoft, meanwhile, has paid the $240 million and formed a strategic relationship with Facebook, for a large $15 billion valuation. Google has Orkut, a network popular in Brazil and India, plus its OpenSocial effort as well as its own experiments with advertising on applications within social networks.
Besides Viacom, there are plenty of other large, aging media conglomerates that don’t a social network. Disney, for example, is reportedly looking to buy up consumer internet companies in the coming months.