Setanta owner invests £8m in Bebo to challenge MySpace

That gap could close even further with the news that Bebo is to receive a substantial investment from Benchmark Capital, which is now set to become the second largest stakeholder in the company.

It is understood that the new revenue will primarily be used by Bebo to open a London office, with a substantial investment likely to be made in developing the website's blogging, home video, and user-generated content technology.

The news follows News Corp's acquisition of MySpace last year for $650m, ITV winning the race to buy Friends Reunited for £170m last December, and more recently, NBC Universal buying iVillage for £342m in March this year.

Bebo has experienced phenomenal growth since its inception eight months ago by husband and wife team Michael and Xochi Birch. Online measurement firm Hitwise UK now expects Bebo to overtake News Corp's MySpace by September as the internet's number one social networking portal.

Bebo, which is designed to attract university and college students, has been savvy to the fluctuating online behaviour of the youth market, which regularly sees users "go wherever their friends go".

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