Consider this a rumor at this point. Forbes’ Elizabeth Corcoran is reporting that two NYC hedge funds have each matched Microsoft’s investment in Facebook for about $250 million each, at the same $15 billion valuation. If true, that would give Facebook a $750 million war chest, which is more than most companies make in an IPO. That should be more than enough to pay for those 700 employees next year.
On the conference call yesterday, Microsoft exec Kevin Johnson implied there might be other investors involved when he said, “If you look at this round of financing they are doing that we are in for $240 million . . .” We asked if there were indeed more investors involved, but Facebook’s chief revenue officer Owen van Natta would only say, “Microsoft is the investor we are announcing today.” But that left open the door for another announcement. Anyone who knows the names of the hedge funds involved, please tell us in comments (or send me an e-mail if you really know).
First! Facebook’s valuation should be closer to 15 Trillion dollars… That’s with a “T.”
A Stealth Web3.0 company will be worth $30 billion
Would it be possible for TechCrunch to create an RSS feed that doesn’t have Facebook articles in it???
I love reading TechCrunch, but I hate reading about Facebook. In my opinion, it really doesn’t deserve the amount of attention that you give it. And, if anything, you’re only contributing to the unnecessary hype that you constantly write about.
Please PLEASE PLEASE create a Non-FaceBook feed for us!!!!!!!!!! I can’t take it anymore!!!
within six months of release
Do they script a storyboard for this stuff in the board room with an artist and everything or do they just wing it when they tip the first domino?
“First! Facebook’s valuation should be closer to 15 Trillion dollars… That’s with a “T.””
No way, I heard Facebook was worth a Googillian.
I’d hate to see that hedge fund contract that let them throw money at this.
It almost seems as though Techcrunch has some incentive to publish Facebook articles. Or maybe Facebook is the only interesting game in town these days.
“I’d hate to see that hedge fund contract that let them throw money at this.”
http://en.wikip.../Leona_Helmsley
In a year or so a seance is convened to notify Mrs. Helmsley that her dog is now on welfare.
Why read TechCrunch if you don’t want to stay on top of what’s going on in the Internet industry? Whether you like Facebook or not, this deal is very big news! Similar in import to when Netscape went public. I have no info on the hedge fund rumor, but I have done some analysis of the MSFT investment, and whether we should view this as a sign of a Bubble. My post is here: http://therealm...nalysis-part-2/
Whether people like it or not, Facebook matters, and this is just more proof of that. It isn’t going away anytime soon.
Facebook is no Google. But that said by Calcanis long time before. But can it be bigger may be but how? Google is valued at 200B. Days are not far if the wall street expectation being met, Google crossing MSFT in market cap.
Is there any metrics which provide how many users in myspace are in Facebook. There is only a handful of users to choose from. Once gain is another loss.
I am SO BORED of reading about FaceBook 10 times a day on this site.
How about something that’s actually interesting?
The value per user is much less than a value per subscriber in most of wireless telco acquisitions.
Yeah there is a lot of stuff on Facebook on Techcrunch but consider the news. A social networking site that is worth $15 billion?? This is absurd.
I agree with Sean.
Please, TC folks, write interesting articles about “real tech companies”, not about overbubbled start-ups…
@Yakov: but users of Facebook don’t pay anything to use the service. they don’t bring cash to the company…
Microsoft is LEASING Facebook for the next 4 years. Facebook is not worth $15B, Microsoft is leasing an advertising distribution system. The equity ownership is so small as to become almost immaterial.
Of course, Facebook will now attempt an IPO northwards of $15B, saying that Microsoft already set the valuation floor. Of course this assumes all the lawsuits regarding ownership are settled.
If the company does go public, what the myopic public should realize is that they are not buying the advertising deal, along with shares. Only Microsoft gets that. Don’t be fooled, Ballmer cut a better deal than the public will ever get. Microsoft is NOT valuing Facebook at $15B. No, no, no. Microsoft is valuing a potentially lucrative advertising distribution deal and a small percentage of Facebook at $240MM.
The public are sheep though, so I imagine Facebook will line-up the investment banking sheperds to take them out at $20B+. Baaaahhhhh.
Now why might hedge funds get involved? Because the bump-up in valuation will go from 15B to $20B on an IPO. Nice % increase for a holding period of likely only a few quarters.
But keep in mind, it’s the investing public (proxied through mutual fund managers, etc.) who will pay the price for all of this. Feels like 2000 all over again. Great move for Facebook, probably a smart move for Microsoft, and probably a smart move for the hedge funds. But remember, this is a game of musical chairs. And as usual it is often the naive public investor left standing.
How many times can someone talk about Facebook’s pending investment, and still make it interesting? Techcrunch is like the news that every 15 minutes repeats the same news over and over. It might keep people hooked on gaining an extra nugget of info right when it breaks, but is the frequency really necessary?
TECHFACECRUNCH!
#16 = smartest/most worthwhile post on the topic.
“Facebook is not worth $15B, Microsoft is leasing an advertising distribution system”.
I agree with JohnM, Microsoft doesn’t value Facebook at 15 billion put pays the 250 million in order to get the advertising deal AND the tiny share.
# 9. Stop throwing blanket statement. Simply say, FaceBook matters to you.
It is sad that “some” comments here tell me how short our memory can be. It seems we don’t learn from history and that is why history always repeat itself. I know most of you will think I am crazy but fast forward 5 years from now and look back it these comments.
Remember 1999 circa 2001, remember Broadcast.com ($5B) and the others. Where are these “flipups” today?
This seem like hypes from the likes of Wall street etc.
I have nothing against FaceBook but it is in sane to value the site at $15B. Why? Simply because users jump on hypes and what their friends tell them is cool. And what is cool today may not be tomorrow.
http://en.wikip...itions_by_Yahoo!
http://en.wikip...le_acquisitions
What are the advantages to advertising on Facebook if no one clicks on or reads the ads?
What’s the advantage of advertising at all. All it does is annoy me and makes me want to avoid the product. Firms should take a page out of Abercrombie & Fitch’s book and let your product stand for itself!
Better update the CrunchBase. It’s quickly becoming out-dated
I honestly do not understand what a social network company needs with 700 additional employees.
Are they hand building their own server farms? Policing the abusive members? Translating all the posts into every language? I don’t get it. The application is not that sophisticated. It seems to be scaling well. Unless those 700 are building all new fb widgets to push all the outside ones off.
This is just a big rumor. But this time, I think it’s not true.
Fake Steve Job wrote it on his blog last night:
http://fakestev...nother-500.html
Stop whining about Facebook news glut. If you’re not interested, don’t read it. Simple!
sure facebook is news…but when did this become a tabloid reporting rumors?
Mike A, please hire Mario Armando Lavandeira Jr. as a new blogger!
Exactly JohnM! Most insightful post I’ve seen on the subject so far.
Do we really need another social networking site glutted with ads?
Not sure why they would need that much capital – quarter of a billion is certainly enough assuming they weren’t completely pissing away their money and doing no revenue. My gut is telling me FB is gonna start acquiring companies…just my gut.
trust, when ppl get tired of Facebook, IT WILL FAIL miserablly!!!
Why?
1. There’s another bubble coming next year because too much money put into web 2.0 stuff, trend, ….etc
2. As more and more Social Network out to the mkt, ppl will just switch to different sites whenever they like.
3. Facebook is too much “ego”, if he is smart…then get 15B now for real.
4. What if there’s a SN raised no where but become a big hit in China? it will generate more users than other SN in the USA.
5. You can NOT rely on ADVERTISING stream…try come up more creative products or strategy!
TechCrunch wants to have Facebook’s children. Or at least a filthy little grope.
Ok another $500million??? They better be creating the technological cure for Aids in the offices of Facebook! lol. What is this money being used for? I want to know how much revenue facebook as a company was already making annually. http://www.mediaoutrage.com it does seem that any site or magazine that you pick up if it pertains to business and technology that somewhere in the midst you will find an article on Facebook. No wonder Google, Yahoo!, and Microsoft were duking it out to get a piece. Who is Mark Zuckerberg’s publicist?
It’s very simple, Microsoft’s deal completely sealed the probability of a Facebook IPO. at this point there is no doubt in the economics of it.
The smartest investments will be made Right Now! no other tech company can take the risk or capital pressure to do this, so Hedge funds pickup where they can’t. If anything, Microsoft mammoth investment for little stake reassures any other investor of the potential of Facebook.
Once they go IPO, it’s going to be a cash machine! Facebook can then tackle Google in every single respect. I’m glad this is happening. there needs to be direct competition to google
Somebody should start a techcrunch aimed at the Chinese and based in analogy speech.
They could convince people about anything, since they take things written online so literally and they think these are actual market queues.
“Like a dagger amongst sheep, Microsoft runs the wolf by the facebook river through my heart., News at 11″
Looks like there are some people that really hate GOOG
Facebook is going to be the main contributor for a bubble burst. Facebook is a company without a revenue model, with less members than MySpace. But Facebook is valued at $15 Billion? No one can tell with a straight how they came up with that $15 Billion number. They have gone too greedy and going to destroy the whole industry for others.
Imagine if Facebook was valued just like any other company. The industry will be able to proceed in a normal pace and a lot of other relevant sites will flurish and get attention. Bubble will not be in sight. One of the main reason the bubble burst in 2000 was people / companies realised that they are not meeting the revenue expectation that was initially hyped to be. We are repeating the same thing or even worst. This time, the hype in on a company which does not even have a clear revenue model. (If they had one, they will reveal their CTR.)
This bubble will take out a lot of companies without a clear revenue model or questionable business model and VC’s who are investing on them. Companies that will survive the bubble are those who have good products. Products that are actually improving our lifestyle. Most social products or sites will crash in a bubble. People are not going to socialize when they are fired or laid off.
I am astounded at the valuation. Now that they have managed to validate the valuation number, it is time to make a few acquisitions:
http://sramanam...trategy-part-1/
Sramana
In other news, google did not buy facebook.
#34 Faramarz ,
” Once they go IPO, it’s going to be a cash machine! Facebook can then tackle Google in every single respect. I’m glad this is happening. there needs to be direct competition to google ”
I have heard a lot of dumb stupid things in the last few days. But yours has to be the winner.
Tell me how FB is going to compete with Google. Google is providing solutions for business who are actually paying for the service. What is Facebook providing? Are people paying for something, anything on Facebook? Is FB coming up with a product to compete with ADSense or Adwords? Cmon, you have to be smarter than that? Even Microsoft and Yahoo who have been in the paid search industry can’t compete with Google, you are expecting a company without business model to complete with Google.
Take your head out of the sand.You sound really uneducated when you say something like that. FB is a hype and uneducated folks like you are riding on it.
I have never ever gone to Facebook. Ever.
All I know about Facebook is that it’s a site that was initially for college students and they opened it (whatever IT is) up for everyone. And they have some kind of “widget” applications (whatever THAT means).
I use Google AT LEAST 50 times a day.
I don’t have a clue on how Facebook can “monetize” me.
$250 Million is a only quarter of what MS, Yahoo or eBay would spend annually on advertising. Coke and HP spends $2 Billion!
Online advertising will increase to $35.4 billion in 2012 according to JupiterResearch.
I think most of that money will go to Google unless a better form of targetting come up besides the carpet bombing approach of adsense.
Don’t hate, emulate. So stop whining like a bunch of prebuscent girls and think about grabbing a piece of that 35 billion pie.
my gut feels like legs mason is behind this…let’s wait and see!
“” Once they go IPO, it’s going to be a cash machine! Facebook can then tackle Google in every single respect. I’m glad this is happening. there needs to be direct competition to google ””
No. People as smart as Larry Page would never work for facebook or Microsoft. Bloated companies like that pick up drone workers, or bees as I call them.
http://www.thes...t.aspx?showID=1
This kind, but a bit smarter.
Google can only be competed against by a fresh start and clear thinking.
Chris Ar:
You keep saying Facebook has no business model. Are you privy to inside information? All the reports I’ve seen that mention a specific figure say they have revenues of > $100M/year, which sounds like there’s at least *some* kind of business model. With just a few hundred employees, that might even exceed their burn rate (i.e., they might be profitable already). Do you know differently, and if so, how?
This shows web 2.0 is getting matured and is getting the confidence of the financial community too. Facebook has taken a turn . I had commented earlier that now Facebook is pacing for an IPO and this deal has helped a lot.
http://blogkatt...-turn_6464.html
#34 Chris Ar – That’s your opinion and i think it’s completely jaded. Google uses adsense revenue to fund it’s other developments. I.e. Mapping, social networks, blogger, their online office apps etc etc etc
Facebook is looking to do the very same. they have reached critical mass, they have a platform, and they have the organization drive to expand the business model. Consider this 250m investment the invisible driving force behind all the more to come.
I use facebook to communicate with friends, but at the same time I hardly think the focus will be to keep it a ’social network’ as it is coined today. they have a lot of products stored under one room. Most people are diluted to think outside the real of facebook just being a chit chat space for college kids.
Berlin, you have made the best comment on this post to date.. Simple says it best.
Targeted advertising is be about 34-38 billion by 2012. How do you (Micorsoft) complete well you invest in a platform that is achieving the following
1. Growing users at a fast rate.
2. Is now studying users behaviour pattern so it can provide better targetted advertising.
3. Has a large user base.
4. Very loyal user base.
5. Last but not least a strategy.
The focus shouldnt be on whether Facebook is worth 15 billion (a company is worth what people are willing to pay for it), I think it is, but i am more interested in the growth potential of facebook.
For the media buyer Facebook in the next year or so may be the defacto platform for advertising.
I can tell you as a media buyer if i can get better targeting for my campaigns then i am willing to pay mega dollars to be there. That is as simple as it gets.
This is called subprime lending for the tech industry.
S U B P R I M E LENDING