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)