LookSmart Raises $60 Million In Mezzanine Round Of Funding
Transaction Ranks as One of the Largest Equity Placements For a Private Internet Media Company
San Francisco, Calif. - March 31, 1999 - LookSmart, the Internet's largest directory of quality Web sites, today announced the completion of a $60 million private equity placement. This round of funding is one of the largest ever raised by a private Internet media company, and brings LookSmart's total capital raised-to-date to $79.3 million.
Investors participating in the Series C funding include:
- Amerindo Investment Advisors
- Citicorp Equity Capital
- Cox Interactive Media
- Essex Investment Management
- Hambrecht & Quist (Access Technology Partners, L.P.)
- Macquarie Bank Group
- New Millennium Partners
- Sand Hill Capital
Macquarie Bank, the pre-eminent investment bank in Australia, acted as financial advisor to LookSmart and as placement agent for the Australia-based investors in the transaction. This funding follows a second round of financing, completed in May 1998, during which LookSmart secured $8.3 million from Cox Interactive Media and AMWIN Innovation Fund (formerly held by Australian Mezzanine Investments), following a management buyout of the company's original primary investor, The Reader's Digest Association, Inc.
The equity will be used to fuel three areas key to LookSmart's continued growth: consumer branding, strategic acquisitions and international expansion.
"The continued and growing support of major media companies and Internet-savvy financial investors is a vote of confidence for LookSmart's adherence to the core fundamentals of great media companies — including quality content, quality audience, sustainable distribution and multiple revenue streams," said Evan Thornley, co-founder and CEO of LookSmart. "The marathon race for consumer loyalty and a sustainable economic model on the Internet is far from over. This financing gives LookSmart the freedom to aggressively pursue our growth plans through the year 2000 and beyond."
"The company's unique commitment to creating a dominant collection of Internet content through a massive investment in human involvement has resulted in a high-quality online experience that has attracted strong partners and an extremely lucrative audience," said Danny Rimer, managing director, Hambrecht & Quist. "Their potential to translate this audience base into advertising and ecommerce revenues is exciting. This equity investment, combined with the company's revenue streams, will enable them to continue their rapid growth and heighten their visibility among Web consumers."
"We believe that LookSmart has honed in on an area of the Internet that has been under served by major players," stated Emeric McDonald, director of research, Amerindo Investment Advisors. "Their unique strategy of distributing their Web directory through LookSmart.com as well as through partnerships with other leading portals, ISPs, and viral marketers, greatly expands the company's reach and creates tremendous revenue opportunities."
LookSmart's 'content' is the world's largest editorially reviewed collection of Web sites, created by more than 150 editorial professionals who find, select, describe and organize thousands of Web sites per day. This human-powered approach has enabled LookSmart to help users find 'useful stuff quickly,' translating into strong user loyalty.
The company has attracted a lucrative audience it calls the New Media FamilySM that is 61 percent female (source: NPD Winter 1999 Search Engine Study), one of the highest percentages of female audiences among all major portals.
"As advertising and transaction fees account for the bulk of portal companies' revenues, LookSmart's strong female demographic is a key differentiator," said Rimer. "As more women use the Web, we see tremendous opportunities for them to grow this audience."
LookSmart has focused on aggressively distributing its collection of Web content through licensing agreements, partnerships with ISPs, and viral marketing. Through broad distribution, LookSmart has jumped from a Top 1000 Web site one year ago, to a Top 25 Web site today. Major partners utilizing LookSmart's directory include MSN, Netscape, AltaVista, HotBot and @Home, as well as more than 150 ISPs, including IBM.net.
In the next month, LookSmart will launch a new user interface for LookSmart.com, which will include a personal investor channel and other loyalty-building applications. In addition, in the near future the company will be rapidly expanding its ecommerce capabilities by building out its existing shopping area and via strategic acquisitions.
"Since refinancing this company last May, we have had the opportunity to start building a great media company by focusing on the enduring characteristics of the business that will not be reliant on the day-to-day changes in technology platforms, distribution economics or corporate shenanigans," said Thornley. "In that time, we've recruited a full compliment of experienced senior management, grown our team from 70 employees to more than 300, and increased traffic and revenue five-fold. This additional financing enables us to accelerate that growth with the committed support of long-term media and financial investors."
Attention Editors: An accompanying photograph is available at http://www.businesswire.com/photowire
The following specialists have been pre-briefed on this announcement: Danny Rimer, Hambrecht & Quist, (415)439-3755; Emeric McDonald, director of research, Amerindo Investment Advisors, 415-362-0292; Andrea Williams, vice president, Volpe, Brown, Whelan & Co., (415) 274-4425; and Susan White, JP Morgan, (212) 648-6286. About LookSmart
LookSmart, a leading Web directory and search tool, and top 25 Web property, creates and maintains the largest editorially reviewed directory of Web sites on the World Wide Web. LookSmart's directory is distributed through multiple channels, including a global network of ISPs, major Web sites, portals and viral marketing. Through its partnership with Cox Interactive Media, LookSmart also offers the largest collection of quality local Web content in more than 65 U.S. markets. The company is headquartered in San Francisco and can be contacted at (415) 597-4850. To see why more and more partners, advertisers, and consumers are turning to LookSmart, visit them at www.looksmart.com About Macquarie Bank
Macquarie Bank, Australia's leading investment bank, is listed on the Australian Stock Exchange with a current market capitalization of $3 billion. Macquarie has established a dedicated group, Macquarie Technology Investment Banking, which is committed to assisting in the commercialization of Australian technologies. MTIB provides assistance on the development and execution of financial strategies, including corporate and strategic advice, assistance with fund raising and consolidations, operating out of the Macquarie Group's offices. Macquarie PRISM, a participant in the transaction, is a unique investment vehicle that has been established by Macquarie Private Investment Banking to facilitate the involvement of sophisticated private investors in venture capital, private equity and public infrastructure investment opportunities. About Hambrecht & Quist
Hambrecht & Quist invested in LookSmart through its Access Technology Partners Fund. Hambrecht & Quist is a leading underwriter of public equity, and a leader in merger and acquisition advisory and private equity services for growth companies in the technology, healthcare, services and branded consumer sectors. H&Q has completed more than 380 equity offerings globally since 1995, raising more than $27 billion for emerging growth companies. H&Q's principal offices are in San Francisco, New York and Boston with additional offices in Europe, Asia, Atlanta and southern California, and a strategic partnership in Israel. Its Web site is www.hamquist.com About Cox Interactive Media
CIMedia, founded in 1996, is a subsidiary of Cox Enterprises, Inc., and is headquartered in Atlanta. A leading media company, Cox Enterprises includes Cox Newspapers, Inc. (newspapers, direct mail marketing, book publishing), Cox Broadcasting, Inc. (TV, spot sales, television production, research, publicly-traded Cox Radio, Inc.) and publicly traded Cox Communications, Inc. (cable distribution, programming, broadband communications) in addition to CIMedia. The company is also the world's largest operator of automobile auctions through Manheim Auctions, providing financial services, government auctions, online services and price guides. About Amerindo Investment Advisors Inc.
Amerindo Investment Advisors Inc., founded in 1979, manages more than $2.5 billion in emerging growth stocks for institutional clients. Primarily an investor in the public markets, Amerindo portfolio companies include Amazon.com (NASDAQ-AMZN), @Home (NASDAQ-ATHM), eBay (NASDAQ-EBAY) and Inktomi (NASDAQ-INKT). For more information, please visit www.amerindo.com About Sand Hill Capital
Sand Hill Capital is a leading venture finance company that provides innovative debt solutions to emerging growth companies in the internet, networking, and telecommunication sectors. Sand Hill Capital has assisted over 50 companies since its founding in 1997. Sand Hill's primary office is located at 3000 Sand Hill Road in Menlo Park with additional offices located in Santa Barbara and Pasadena. Its web site is www.sandhillcapital.com
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