Online media sale turns best friends into millionaires

Two young entrepreneurs, who started an internet business in a London flat three years ago, became multi-millionaires yesterday when they sold their company to an American group for £100m.

Daniel Ishag, 30, started Espotting Media, an online advertising company, with his best friend Seb Bishop at the peak of the dot.com boom in February 2000. But while many internet start-ups went bust as the dot.com bubble burst, the pair built a business which has now been sold to Findwhat.com in the United States for a mixture of cash and shares. Mr Ishag, a former banker, said yesterday: "We had a rough ride building this business when the bubble burst. We really had to graft."

Mr Ishag declined to say how much he would make personally from the deal and said he had not even thought about his new-found wealth. "It's not really about that," he said. "I couldn't think of anything else I'd rather do."

Espotting is a privately controlled company which devises software which powers internet search engines. It has developed a system in which online advertisers bid against each other to secure top billing in online searches for key words such as "loan", "car" or "holiday." It was Mr Ishag's idea but he roped in his friend Mr Bishop, 29, who worked in advertising. "He worked for Young & Rubicam and so this was in his field. And we'd known each other since we were 12 because we used to share a room together at school, in London."

Both will stay on at the merged company after the deal though neither will be chief executive. Under the terms of the deal Espotting's shareholders will receive $27m (£16m) in cash and 8.1m shares in Findwhat.com. Shares in the US firm soared yesterday valuing the Espotting deal at £82m. Espotting shareholders will hold 29.5 per cent of the equity in the enlarged company with Findwhat.com holding the remainder.

Few figures were available on Espotting yesterday. Mr Ishag said it was profitable but declined to give any detail, Findwhat.com operates a similar internet software technology. It floated on Nasdaq in 1999 and currently has a stock-market value of $350m. It made its debut profit last year with net income of $10.7m on sales of $43m.

Mr Ishag said that the first two rounds of Espotting's fund-raising came from the co-founders and other private individuals. Subsequent funds were raised from two venture capital companies, ProVen and Matrix. The company now employs over 100 people in its offices in the East End of London. In addition to the UK it operates in nine markets across Europe, including Spain and Italy. The Espotting deal is the fourth time this year that a small search-engine technology company has been bought by a larger rival.