If ever there was an illustration of how Internet companies can seemingly suck money out of thin air it is to be found at the plush London offices of Jellyworks. The paint has yet to dry on some of the walls in the Internet investment firm's Westminster HQ. Its website is still under construction. In the boardroom, which overlooks St James's Park, roller blinds lie on the floor, waiting to be put up.

Through the window looms the Treasury. What Iron Chancellor Gordon Brown would make of Jellyworks can only be imagined, but the prudent Scot is unlikely to find any evidence of neo-classical endogenous growth in the month-old company's brief history. Floated just before Christmas, Jellyworks has seen its market value soar from £10 million to more than £240m.

The reason for this gravity-defying leap is that the City is betting on a hunch. Investors in Jellyworks believe the company has the expertise and access to capital that will allow it to invest in those fledgling technology businesses which may become the Microsofts of the future.

Much of the euphoria surrounding the company's share price stems from a feeling of déjà vu. The company's chief executive is 24-year-old Jonathan David Rowland, who left Bedales after his GCSEs, tried his hand at a number of jobs, and now finds himself under the Square Mile's spotlight. The putative investment guru is the son of David Rowland, the property magnate and legendary fixer who reputedly made his first million by the age of 23, earning himself a place in City folklore and the sobriquet 'Spotty' to boot.

Rowland senior's later business dealings were not so coruscating. Williams Hudson, a Rowland-controlled conglomerate, went under in the 1970s. A Rowland-backed takeover of Hibernian football club ended up in receivership.

Now it is up to Rowland junior to prove he has his father's precocious alchemic touch. The story goes that Rowland senior gave his son £8m to set up Jellyworks. The money came from a firm called Easton Investments, a Guernsey-based company owned by the Rowland family's trusts. A family friend, Edward Guinan (Rowland senior was his best man), invested £1m and is now the company's chairman.

The two older men are adamant that it will be Rowland junior who calls the shots. One obvious reason is that, as a tax exile, Rowland senior could attract the attentions of the Inland Revenue if he were seen taking a part in the company's activities.

'I respect what my father's done. He's a clever guy,' says Jonathan Rowland. 'He has left us alone and he's not involved day to day. If I see him for dinner, we chat and that's about it. He trusts my judgment and trusts Ed.' Never the less, the links to the Rowland family seem extremely strong. Even the Jellyworks HQ is rented from the family.

The idea of floating an Internet investment vehicle seems to have been Rowland senior's as well. Says Jonathan: 'I got married in October, and when I got home I spoke to my father who said "you should put together a public company which will be investing in Internet stuff". I spoke to Ed. He'd been having the same thoughts for six months.'

The company's name came from a brainstorming session between chairman and chief executive. 'We sat around trying to dream up something whimsical but unforgettable which had a .com still available,' Guinan recalls.

Guinan, a former Wall Street trader, claims Jellyworks has huge resources. 'We are unique in that we are not restricted by access to capital. If we saw an opportunity we wanted to deploy serious amounts of money to, we could do it. We have serious firepower. We're looking at larger transactions now. If we saw a £100m deal today we could do it.'

So far, Jellyworks has done little to earn its stellar value. The company has made, or has options to make, investments in a number of Internet firms including EPO.com, a Swedish online investment bank; Antfactory, a US incubator for early-stage technology companies; and Orchestream, a software company specialising in solving Internet congestion problems. Orchestream's chief executive, Ashley Ward, is JellyWorks' sole non-executive director.

Guinan is 52. Rowland insist theirs is a partnership of equals. Guinan is an expert in corporate finance while Rowland, who once worked in the family's property business as a trainee surveyor, is strong on identifying investment targets.

Guinan says: 'This was a lucky relationship. We were old friends anyway. It's a very powerful situation. We have some deep brainstorming sessions. Jonathan and I could go and have a beer in a pub and create a new company, literally.'

Rowland got the thirst for seeking out investment targets after working for his father. 'I decided 18 months ago the best thing to do was work with the old man, who had a proven track record. I'd resisted it for five or six years. I sat under his guidance, listened and learned.'

He then started to identify Internet investment targets. 'I understood it better than he did. I started to source deals, ring people up, meet people.'

Some of Rowland's earliest investments included Autonomy (an Internet software company) and Demon, an Internet Service Provider.

Now things have changed. Answering to shareholders rather than to the Rowland family creates new pressures to deliver returns - either through selling Jellyworks' investments at a premium to trade or through Initial Public Offerings. This hybrid firm - a blend of venture capital outfit and shell company - may be a strange beast to UK investors, but it is not without successful precedents.

Rowland cites as the company's role model CMGI, the US investment powerhouse which started out as a direct mailing firm and has now made billions by investing in technology stocks, notably Internet search engine Lycos.

Of course, such success can be sustained only if the value of Jellyworks shares remains buoyant. If sentiment turns against the firm, chances are its boasts of being able to secure access to capital will wear thin.

Guinan is dismissive about this possibility: 'We were asked "is your company money for old rope?". I'm not entirely sure what that comment meant. We see ourselves as building a billion-pound company.'

Jonathan Rowland has even greater designs: 'I respect what Richard Branson's done with Virgin. I think we can make Jellyworks a similar sort of brand in the future.'

The Internet - it's a wibbly, wobbly world.

Profiles

Name: Jonathan Rowland

Job title: Chief executive of Jellyworks

Born: 8 June 1975

Other directorships: None

Hobbies: Saloon car racing; holds pilots licence

Name: Edward Guinan

Job title: Chairman of Jellyworks

Born: 7 October 1947

Other directorships: Chairman, chief executive and founder of International Advance, a privately held investment company.

Hobbies: Spends weekends at country house in Northamptonshire; horse-riding