US and UK-based venture capital company Summit Partners has invested between €20 million and €30 million in Hostelworld.com, an Irish internet company.
In one of the biggest investments in an Irish dotcom since the collapse of technology and internet-based investments in 2000, it is understood that US financier Summit Partners has invested a sum between €20 million and €30 million in the Irish company's parent, Web Reservations. It is the first investment that the US business has made in the Republic.
Hostelworld.com provides an internet booking service for travellers looking for budget accommodation around the world. Mr Tom Kennedy, a director and co-founder of the company along with Mr Ray Nolan, refused to discuss any details of the deal yesterday. However, The Irish Times understands that it was completed some time last month. It is not known what size stake Summit has taken in exchange for its investment.
According to the company's most recent annual return, Mr Kennedy and Mr Nolan have a stake in Web Reservations, along with a number of offshore companies and private individuals. Shareholders also include U2 manager Mr Paul McGuinness, US company Silicon Prairie Partners, and London-based JAC Pension Fund.
Its balance sheet for the end of December 2002 shows it had improved its financial position over the previous 12 months. Shareholders' funds stood at €114,450, whereas they had been in the red to the tune of €617,729 a year earlier. There was a marked reduction over the same period in the accumulated losses recorded in its profit and loss account, to €239,068 from €912,817.
Web Reservations did not file a full profit and loss account as it availed of an exemption from this obligation open to small companies. However, Summit generally invests in emerging businesses that have reached profitability.
Summit has offices in Boston, Palo Alto in California, and the UK. The company has a capital base of $5.5 billion (€4.6 billion). It offers equity and debt to businesses in sectors like technology, healthcare, financial services and industry. Deal size varies between $2 million (€1.7 million) and $250 million (€208 million).
Summit's backers include: US pension funds owned by workers in the public services of various states; private pension funds like Allianz, General Motors and Abbott Capital Management; and academic institutions like Georgia Tech, Harvard and Yale.
Hostleworld.com has developed it own software for its purpose, which it has licensed to 6,500 hostels across the globe. It operates mainly through two brands, hostelworld.com and hostels.com.
Mr Kennedy and his business partner, Mr Nolan, founded Hostelworld in 1998. Last year, it was awarded an Ernst & Young Emerging Entrepreneur of the Year Award.
Hostelworld is based in the Dublin suburb of Rathmines.
