When the WSJ broke the story about Russian tech investment group Digital Sky Technologies looking to buy a stake in Facebook for $200 million – a deal that would value the private company at $10 billion in preferred stock – there was still some uncertainty about whether the firm was gunning for a seat on Facebook’s board of directors as part of the investment offer, of if they’d be happy with just purchasing equity.
This is important, because we know Facebook recently received a term sheet for a similar venture round of funding at a lower valuation ($8 billion) which was turned down because it was based on the requirement of a board seat.
By now, everybody knows well that founder and CEO Mark Zuckerberg is quite serious about retaining control over Facebook’s board of directors and hence that the requirement of a seat is a touchy subject for any new firm looking to buy a piece of Facebook.
Now it seems that the investment proposal Digital Sky Technologies (DST) made to Facebook did in fact also require a board seat for its founding partner Yuri Milner, President of DST Advisors. It’s speculated that this would ease the path for DST to merge some of its social networking properties, which include Mail.ru, Odnoklassniki.ru, Nasza-Klasa.pl and particularly vKontakte.ru (a popular social network for Russian speakers with almost 35 million registered users and ironically, a Facebook copycat) with Facebook at some point in the future.
We’ve contacted both DST and Facebook for comment.
It’s important to note that it is still unclear whether Facebook has made any decisions around accepting or rejecting the investment offer made by DST, or even if it has already responded to its outreach in any way. But if the company ends up accepting the financing offer, we’ll know what how much the company values a board seat at: $2 billion.
(Source: Russian business newspaper Kommersant, via Quintura Blog)
That is interesting…but I have no idea how can this company manages to expand Facebook while Facebook isn’t that popular in Russia.
I think you may not familiar with the Russian Internet landscape.
The most popular site in Russia is vKontakte, which these guys own and which essentially IS the Russian Facebook.
“vKontakte.ru (a popular social network for Russian speakers with almost 35 million registered users and ironically, a Facebook copycat) with Facebook Inc at some point in the future.”
You win the prize for the most annoying person to comment on every single techcrunch post!
Also your pic looks like you are engaged in the oral pleasuring of a startup CEO.
Dude, I think the poster was responding to the first comment.
Chill out, big guy, and step away from your computer for a few minutes … it’s a holiday.
Yeah… this is the same idiot spammer that was bugging Arrington a while ago to become a “Senior Editor” at Tehchrunch…. the one “From India”
I wonder how would it benefit the company? Maybe through advertising?
If this happens, then it’s time to kill the russian commie bastards again, which we will do.
And it will be the death of Facebook and social networking, which it will be.
As if 9/11 wasn’t enough, then Obama attempting to kill capitalism and industry in America… now the FUCKING RUSKIE MOTHERFUCKERS IN AMERICA.
THE WAR IS ON, RUSKIE MOTHERFUCKERS. YOU ARE GONNA DIE, COMMIES. THIS IS THE GUARANTEE OF YOUR COMMIE LIVES.
“America” (you are not any part of real America of course, you are just a single geeky jerk). You are broke and owe the rest of the world 12 trillion dollars. Basically, you are not JUST broke, you are broke and all mortgaged SEVERAL times. It’s just about time to realize that.
Actually, you boatfucking commie liar, you owe America, and your little and dying civilization of ignorance, crime and lies owes America and our entire planet for your plagiarism, terrorism, knock off industry, loss of jobs, criminal activities and war crimes, and everything else you filth owe us all. America DOES NOT owe you one capitalist cent, rusk. Not one.
The more you attempt to perpetuate the myth that America and freedom owes you “12 trillion dollars” and that America is “just one person left upon the communist conquered Earth”, the further you fall downward from realizing your inevitable and present failure and the insurmountable consequence of your dead and nonexistent future.
We plan to collect from you, rusk, because America always comes to collect from our enemies.
Is that geeky enough for you, you fuckless wonder? Just one person, right, fuckless? Right?
relax fellas theres enough corrupt people on both sides of the aisle to go around.
Social Media Wars over the next 5 years will obliterate Fadbook. one channel “social shoes” cannot fit all. its gonna take strategic niche multi channel networks to harness the full potential of social media.
YEAR 2015 : There will be only one major social media player.
Why?
1. fadbk-users experience poke me gimmick burnout- users realize friends arent hiring, buying or selling. fb users are considered lazy time wasters. users disassociate in droves with 3 clicks of a mouse.
2. myspac- tricks are for kids-users mature and realize they are surrounded by kids 10-19 year olds. 20-40 year olds leave to get there lives back on track. social media detox.
3. MyLocator – becomes greatest strategic multichannel business social media empire ever created. dominates online and mobile business social media. social media wars are over and Goggl attempts to buy MyLocator to no avail. Googl, Microsft and fadbk merge in an attempt to compete. MyLocator now is the #1 Social Location Engine with 75% of the market.
StrategyLocator.com – prepare yourself
Yep. This is very geeky… and republican… and 19-th century.
One thing you and your republican friends don’t understand is:
The wars are won by BATHROOMS, the side that doesn’t use bathrooms with central heating – wins. I’m not kidding.
You can assess all present and future war-related projects according to this criteria, broke geek “America”.
BTW, I live in America, because I took over a piece of real estate here many years ago; so, don’t expect that I can’t come to your house with a baseball bat (I love baseball).
> The wars are won by BATHROOMS, the side that doesn’t use bathrooms with central heating – wins. I’m not kidding.
we in Russia do have heated bathrooms. so i guess facebook would reject.. )
Social Media Wars over the next 5 years will obliterate Fadbook. one channel “social shoes” cannot fit all. its gonna take strategic niche multi channel networks to harness the full potential of social media.
YEAR 2015 : There is only one major social media player. MyLocator with 85% of business social media traffic online and mobile.
Why?
1. fadbk-users experience poke me gimmick burnout- users realize friends arent hiring, buying or selling. fb users are considered lazy time wasters. users disassociate in droves with 3 clicks of a mouse.
2. myspac- tricks are for kids-users mature and realize they are surrounded by kids 10-19 year olds. 20-40 year olds leave to get there lives back on track. social media detox.
3. MyLocator – becomes greatest strategic multichannel business social media empire ever created. dominates online and mobile business social media. social media wars are over and Goggl attempts to buy MyLocator to no avail. Googl, Microsft and fadbk merge in an attempt to compete. MyLocator now is the #1 Social Location Engine.
StrategyLocator.com – prepare yourself
real communists don’t buy stakes. in communizm, companies belong to people
Good point!
… as f.i. AIG
Man,
You better open your eyes. It is not Russia that threatens US now. The threat comes from Middle East and China. Stop living in the last century.
interesting because of the different approach to the other big facebook copy cat site http://www.Studivz.de that is being sued both in Germany and the US.
vKontakte is almost a one-to-one copy of Facebook (incl. some source code and the design), but with the market power they have in Russia, the complex legal framework in Russia (remember the http://www.allofmp3.com saga), the money that is behind vKontakte (from unclear sources), this might be an offer that Facebook cannot decline. But does it prove the valuation of Facebook? not really!
>> vKontakte is almost a one-to-one copy of Facebook (incl. some source code and the design)
Have you actually seen the site? I guess not.
Очень интересно, как пойдет, мда
Oh I agree completely with you @Facebook User… Vhot?
DTS is just putting on a front
may this be FSB/KGB instigation ?
I think it IS
Actually, you boatfucking commie liar, you owe America, and your little and dying civilization of ignorance, crime and lies owes America and our entire planet for your plagiarism, terrorism, knock off industry, loss of jobs, criminal activities and war crimes, and everything else you filth owe us all. America DOES NOT owe you one capitalist cent, rusk. Not one.
The more you attempt to perpetuate the myth that America and freedom owes you “12 trillion dollars” and that America is “just one person left upon the communist conquered Earth”, the further you fall downward from realizing your inevitable and present failure and the insurmountable consequence of your dead and nonexistent future.
We plan to collect from you, rusk, because America always comes to collect from our enemies.
Is that geeky enough for you, you fuckless wonder? Just one person, right, fuckless? Right?
If they get a board seat for an investment of $200M then a board seat is worth $200M, not $2B
Actually, Robin’s right: if they turned DOWN a similar round an 8B$ valuation, because of a board seat… and accept this one at 10B$ WITH a board seat…
A board seat is worth 2B$ to FB. Pretty straightforward math…
The only thing to change was the board seat on one hand and 2B$ on the other.
they will turn it down anyway, so there no point in discussing about the “price” of a board seat, also this view is over simplified to death.
So, if all things been equal, the offer they turned down was USD 7bn, the seat was worth 3bn instead? This “straightforward math” does not add up… I will make an offer for 1 USD, just to make that a very expensive seat!!!
The thing is, the $8 billion investment offer was rejected solely based on the board seat requirement according to our sources. A $1 offer would be rejected because it’s too low and all that.
But Robin they’re not investing $8B or $10B, that’s just the valuation. They’re only handing over $200M so they only had to “pay” $200M to get a board seat, and “valuation” is always changing anyway.
As a Russian myself I cannot say I would pick a seat on Facebook at that valuation. I would instead turn and look to http://www.worstpizza.com and buy a seat on their board for like $20
Ya, I would have to agree! You could make 10X your investment back on that site. And a lot less capital at risk. It’s all about risk management my friends.
I take it that you’re interested in investors? I’ll trade ya board seats…http://www.WorstTaco.com
Special rebate: I sell a board seat for $1.5B. The offer stands for a week. Any taker?
Here’s my $0.02 addition to this pool of amazingly uninformed commentary.
Apart from the obvious need for capital, another reason why Facebook might be interested in going to bed with DST is because most of DST social networking properties in the former Soviet space appear to be profitable while Facebook is not, or at least not yet.
If DST-owned social networking properties manage to make money in post-Soviet states where $10k GDP per capita is the norm, imagine what would happen if Facebook used the same strategies in a $45k GDP per capita economy. And DST might be the only ones to know how to get Facebook to be profitable in the developing world, where most of its growth is currently happening anyway.
Of course the markets where DST is currently operating ARE different from Facebook’s home base. Post-Soviet countries have much less of that free-for-all, openEverything, share-the-pie-with-your-friends-and-enemies-alike mentality which has infested much of the Free World – with notable exceptions of, well, Apple and Microsoft.
> Post-Soviet countries have much less of that free-for-all, openEverything, share-the-pie-with-your-friends-and-enemies-alike mentality which has infested much of the Free World
including ‘America’ commenter here, hehe. lets look how the free world is ready to share
step 1. hire some indians to build some cheap copy of facebook. step 2. host it ON A RENTED SERVER of some hosting company, not try and be all google type shit and build your own “datacenter”. step 3. slap some ads RIGHT AWAY throughout the site.
step 4…… laugh straight to the bank with all the money you just made
Such impact these new social media tools have. Facebook and Twitter are changing the way businesses work now
The way math works! Who would say so?!
Unless Facebook desperately need the $200million they’ll give a board seat away. Otherwise Zuckerberg will keep his stronghold of the board of directors
If this happens, then it’s time to kill the russian commie bastards again, which we will do.
And it will be the death of Facebook and social networking, which it will be.
As if 9/11 wasn’t enough, then Obama attempting to kill capitalism and industry in America… now the FUCKING RUSKIE MOTHERFUCKERS IN AMERICA.
THE WAR IS ON, RUSKIE MOTHERFUCKERS. YOU ARE GONNA DIE, COMMIES. THIS IS THE GUARANTEE OF YOUR COMMIE LIVES.
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