Xworks, the London-based e-business incubator, launched last August has achieved its first exit from its portfolio of investments with the sale of Formula-1.co.uk, motor racing website, to the digital media and communications company, 365 Corporation.
Xworks achieved a 400 per cent profit on a year’s investment of around GBP75,000. The total amount of the deal was GBP0.25 million. The consideration consisted of GBP0.175 million in cash, plus GBP0.075 million in shares.
The transaction sees Formula-1.co.uk join 365’s group of entertainment and sports-focused websites. It will not be rebranded as a 365 site, but will retain its name and website address until further notice. As part of the deal, Earl Alexander, site editor of the website, will join 365 Corporation to head up the team running the site’s content.
Despite a minimal marketing spend, the site has built an audience of more than 1 million page impressions per month, making it one of the top three UK F1 websites. Jenico Preston, head of marketing said: “This is our first business that has completed an entire life cycle and has proven our business model. It has demonstrated to a lot of people that it is possible to have success, without investing a huge amount of money from the offset.”
He adds that as a company, Xworks takes an active interest in each of its companies: “You have to roll your sleeves up and get your hands dirty.”
The key to the success of the site, he says is all about knowing your user. “All Formula-1 fanatics are interested in, is the latest news. Formula-1.co.uk is designed to target this requirement with updated hourly news, 20 hours a day.”
Now that 365 Corporation has taken the company under its wing, Preston believes that Formula-1.co.uk has the potential to become a market leader. Justin Drummond, chief executive comments: “We are delighted that our investment in Formula-1.co.uk has been recognised by 365 Corporation and that the site has been added to its market-leading stable of sports and entertainment websites.”
“We invested in this site at the top of the market and despite selling in today’s difficult environment, we’ve managed to complete this exit and recognise a profit on sale. In my view, this represents successful incubation.” Preston also comments on the success of their business model: “Xworks was born post-bubble and so had more realistic expectations and was very cautious about its levels of investment.”
Xworks five portfolio companies are generating significant revenues and four are in profit. It is hoped that there will be another exit in the pipeline for the near future.