Investment firm takes stake in Forbes

Local investment firm Elevation Partners, which counts Bono of the rock group U2 as a managing director, announced Monday that it bought a minority stake in Forbes Inc.

For Forbes, a family-held business that will rename itself Forbes Media as part of the deal, the investment fuels its online and print expansion in the United States. In Elevation Partners, Forbes has entertainment and tech-savvy advisers bullish about the media's growth online.

For Elevation Partners, the Menlo Park private equity group created in 2005 with $1.9 billion to invest, the deal represents its first major foray into traditional media.

"I think the Web is becoming more important in people's lives," said Roger McNamee, managing director and co-founder of Elevation Partners. "The next transformation is that people will want content when they want it, how they want it, where they want it. They have a tremendous need for insight because they don't have enough time."

Steve Forbes, chairman and publisher of Forbes, said that despite what naysayers may think about the Internet killing off traditional media, "the media universe is expanding. We see opportunities and we want to seize them before others seize them."

Both Forbes and McNamee declined to give details of the agreement. The New York Times put the deal at $250 million to $300 million for a 40 percent stake in the company.

Venture capital mostly flows to technology companies, but lately investors have put money into content companies that are gathering Internet audiences. The news of the Forbes deal came on the same day that Softbank Capital, a venture capital firm, announced it was investing $5 million in HuffingtonPost, the online news and opinion site started by Arianna Huffington.

In October 2005, McNamee, who has helped run other major investment funds in the Silicon Valley, raised money for Elevation and helped bring together a team including Fred Anderson, former chief financial officer at Apple Computer, and John Riccitiello, former president and chief operating officer of Electronic Arts.

The Forbes deal is Elevation's third investment. It invested $100 million in Move.com, formerly Homestore, a home and real estate site, and $300 million in Pandemic Studios and BioWare, two independent video game developers.

For Bono and McNamee, a musician himself whose telephone music for callers on hold featured the Doors on Monday, the Forbes deal is more than an investment.

"When Bono talks about getting rid of poverty, a big part of what he does is give people the tools to improve their lives economically," said McNamee, who said he expects to see a Forbes magazine wherever there's a growing economy.

"That's about entrepreneurship and capital. And it's at the individual level. You have to do it from the bottom up. Forbes isn't the whole answer, but they are part of the answer."