Facebook raises US$500m – now valued at US$50bn

3 Jan 2011

Social networking giant Facebook has just received a US$500 million investment from Goldman Sachs and Russian firm Digital Sky Technologies in a deal that values the young company at over US$50 billion.

Two years ago Microsoft paid US$240 million for a 1.6pc sliver of Facebook then valuing it at US$15 billion. Last year Digital Sky Technologies (DST) paid US$200 million for a 2pc stake valuing it at US$10 billion.

However, this latest injection by Goldman Sachs and DST values the social networking doyen at US$50 billion, according to a yet-to-be-confirmed report in the New York Times.

In the last two years Facebook effectively doubled its user base from 250 million people to over 500 million people.

It is understood that US$450 million of the latest investment comes from Goldman Sachs and US$50 million came from DST and that a further US$1 billion could be raised from Goldman Sachs’ high net worth clients.

The latest investment – which gives Facebook a valuation greater than Yahoo or eBay – will give Facebook considerable edge in hiring the talent and making the necessary expansions to cement its growing position as a key cornerstone of today’s internet.

It emerged in recent days that Facebook is planning to shift its headquarters in Silicon Valley to the former Sun Microsystems campus in Menlo Park.

Facebook currently employs 1,500 people, including over 200 in Dublin. It emerged recently the company plans to hire a further 100 workers at its European headquarters in the Irish capital.

Facebook IPO is inevitable

All of this activity points strongly towards an inevitable IPO. Facebook stock has already been selling very well on the private market, with Netscape founder and HP board member Marc Andreessen buying US$80 million in shares and Bono’s Elevation Partners acquiring US$90 million in shares.

Key figures at Facebook have said that Facebook is unlikely to IPO before 2012, but things could change. The company’s 26 year-old founder Mark Zuckerberg said earlier this year that an IPO was inevitable.

Microsoft and Google were both hot properties in the private shares market and this activity pressurised them into going public.

However, it may not be all plain sailing. The Securities and Exchanges Commission in the US is understood to be mounting an inquiry into the astronomical trading taking place in the private market as companies like Facebook, Zynga, Twitter and LinkedIn attract investor interest.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years