Jan. 4: Facebook, the popular social networking site, has raised $500 million from Goldman Sachs and a Russian investor in a deal that values the company at $50 billion, according to people involved in the transaction.
The deal makes Facebook now worth more than companies such as eBay, Yahoo and Time Warner. The stake by Goldman Sachs, considered one of Wall Street’s savviest investors, signals the increasing might of Facebook, which has already been bearing down on giants like Google.
The new cash prop will give Facebook more firepower to steal away valuable employees, develop new products and possibly pursue acquisitions — all without being a publicly traded company. The investment may also allow earlier shareholders, including Facebook employees, to cash out at least some of their stakes.
The new investment comes as the Securities and Exchange Commission has begun an inquiry into the increasingly hot private market for shares in Internet companies, including Facebook, Twitter, the gaming site Zynga and LinkedIn, an online professional networking site. Some experts suggest the inquiry is focused on whether certain companies are improperly using the private market to get around public disclosure requirements.
The new money could add pressure on Facebook to go public even as its executives have resisted. The popularity of shares of Microsoft and Google in the private market ultimately pressured them to pursue initial public offerings. So far, Facebook’s chief executive, Mr Mark Zuckerberg, has brushed aside the possibility of an initial public offering or a sale of the company. However, people involved in the fund-raising effort suggest that Facebook’s board has indicated an intention to consider a public offering in 2012.There has been an explosion in user interest in social media sites.
The social buying site Groupon, which recently rejected a $6 billion takeover bid from Google, is in the process of raising as much as $950 million from major institutional investors, at a valuation near $5 billion, according to people briefed on the matter who were not authorised to speak publicly.
“When you think back to the early days of Google, they were kind of ignored by Wall Street investors, until it was time to go public,” said Mr Chris Sacca, an angel investor in Silicon Valley who is a former Google employee and an investor in Twitter.
The Facebook deal is likely to stir up a debate about the company’s worth.