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Bebo, which was advised on the deal by Allen & Co, has struggled in the US, but is the third most popular social networking site in the UK after Facebook and MySpace, where it is visited by 4.1 million, mostly younger people a month.

Like Facebook and MySpace, it enables its users to set up profiles and share pictures and other information, and it has also commissioned and aired a number of short format TV shows, such as Kate Modern, which is watched by 1.5 million of the site's users each week.

When Silicon Valley entrepreneurs Mr and Mrs Birch set up Bebo in 2005, it was backed initially by Balderton Capital, the venture firm, which paid $15 million for a 16 per cent stake.

Today Balderton said it was cashing in its stake for $140 million - about 9 times the amount it invested - suggesting that Mr Birch and his wife have netted just over $700 million, though Bebo would not say what the couple's precise stake in the company was.

According to eMarketer, the analyst, the market for advertising on social networking sites will grow to just over $2 billion this year from $480 million in 2006 - and will reach $4.1 billion by 2011.

Social networking sites global audiences (and growth in last 12 months)

MySpace 77.4m (13 per cent)

Facebook 38.5m (200 per cent)

Windows Live Spaces 30.4m (27 per cent)

Yahoo! Groups 13.3m (-12 per cent)

Bebo 7.1 million (60 per cent)

Source (Nielsen Online)

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