In the latest Internet rags-to-riches tale, CMG Information Services announced that it has purchased a 40 percent stake in Raging Bull, a Web site devoted to stock discussions founded by three 20-somethings.
According to William Martin, a 20-year-old Raging Bull cofounder, venture capitalists associated with CMG agreed to pay between $1 million and $3 million for the stake. Both Martin and CMG declined to be more specific.
CMG has made a name for itself in the Net industry by investing in dozens of online companies, including GeoCities, which raised nearly $81 million though an initial public offering in August. CMG also was an early investor in Lycos, which later went public and rewarded CMG with a handsome profit.
Marc Poirier, a professional with @Ventures III, which made the Raging Bull investment, said that the fledgling company is up to the daunting challenge of cathcing up with existing message boards that already have gained momentum.
"While we acknowledge they have a gap to close, they're clearly gaining ground fast, and users are voting with their fingers," said Poirier, referring to a tenfold increase in visitors to the site during the past year. "We're really optimistic about this company."
Martin, for his part, is optimistic as well. He said hopes to follow in the footsteps of Yahoo founders Jerry Yang and David Filo, who left Standford University to start the wildly popular search engine and later became millionaires after taking the company public.
"This summer we've had a lot of ideas that would just blow everybody away," said Martin, who is taking time off "indefinitely" from studies at the University of Virginia. "But we haven't had the resources to implement them. Now we have arms and we're ready to go to war."
Joined by Greg Wright, a 21-year-old friend who also attended the University of Virginia, and Rusty Szurek, a 20-year-old student atRutgers University, Martin started Raging Bull as a hobby last year. The site received "a few hundred" visits per day until its relaunch in June, when that number shot up to 8,000, Martin said.
Within weeks, the trio began getting calls from companies interested in cutting a deal. Martin declined to name most of the suitors, but said they included Infoseek and "other sites with greater influence."
With financing from CMG's @Ventures III fund secured, Raging Bull is in the process of moving its offices to Andover, Massachusetts, about 25 miles from Boston. Martin said the company will use the money to upgrade servers and hire new employees. Chief among the new hires, he said, will be a chief executive.
"I think we're very articulate and very good at what we do," Martin said. "But we also need some adult supervision."