[See update; a good source tells VentureBeat this story isn't true, no deal has been closed]
Two un-named hedge funds may have invested $250 million each into Facebook, according to Forbes blogger Elizabeth Corcoran.
These deals apparently happened in tandem with the $240 million that Microsoft invested into Facebook, announced yesterday. Corcoran says the hedge funds invested at the same $15 billion valuation as Microsoft.
The numbers, if true, mean that Facebook now has $750 million in the bank. Add that to Facebook’s tight relationship with Microsoft and, finally, a real challenger to Google may be emerging.
Note that Corcoran, who oversees Forbes’ online reporting efforts, works closely with investor Roger McNamee, of Elevation Partners, a large buyout fund in the media industry. McNamee has negotiated with the Facebook founders in the past, offering to help cash some of them out (providing them cash in return for some of their early shares), and so his firm has close ties with the Facebook. Fake Steve Jobs, a satirical blog — not so much a news source — written by Forbes reporter Daniel Lyons, also reported the hedge fund investment. But it has been wrong in the past. For example, it recently said Podtech was closing down. This isn’t true: Paul Matteucci, a partner at US Venture Partners, on Podtech’s board, told VentureBeat this morning that he and the CEO James McCormick “spent a day last week working on the company’s long-term plans. We are having a good revenue quarter and focusing on what’s next.
So it’s important to note that Corcoran, by contrast, is a serious reporter, and is well placed, so we’re assuming she has this right. Facebook responded, to say “no comment.”
Facebook tracks your every move on the site, including which profiles you look at, or so we’ve heard well-placed Facebook employees whisper. “We track usage on Facebook in order to report accurate metrics on growth and engagement,” Facebook replied, when we asked about that.
This means it has a treasure trove of user data and behaviors that it can use to help target Microsoft ads. This data gold mine could turn into the anti-Ad Sense money printing machine that Facebook needs.
Some more tidbits from the webosphere:
The official Microsoft self-congratulatory email to all its employees about the deal, here — “Great job you really pulled this together unbelievably,” Microsoft chief executive Steve Ballmer replied.
The valuation, assuming it pans out to actual money, makes Facebook the fifth most valuable internet company – as Techcrunch points out. It is more valuable than the big Silicon Valley chip maker AMD.
The valuation also makes Facebook founder Mark Zuckerberg worth $5 billion – Valleywag has a source saying Zuckerberg owns around 30 percent of the company, which we’ve also heard.
10 Comments
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Sramana Mitra said:
Hi Matt,
Don’t you think Zuckerberg should make the valuation “real” by using the currency to acquire some real money-makers, and thus beef up his business model?
http://sramanamitra.com/2007/07/25/facebooks-monetization-strategy-part-1/
Sramana
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Michael Rolnick said:
Corcoran’s integrity as journalist in unquestionable. Unlike some of the bloggers, she is a journalists interested in truth rather than rumor.
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Andre Quellos said:
Does anyone else find Ballmer’s grammar appalling (or at least funny)?
“Great job you really pulled this together unbelievably”
Give me a break.
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Bulletin News said:
Dynamite review pertaining to Facebook roundup: Hedge funds invest $500 million, and more. I love your blog.
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Hedge Fund Blog said:
Anyone tracking what other hedge funds are investing in social media / web 2.0 ventures?
I’d be interesting in speaking if you are one of them.
- Richard
http://richard-wilson.blogspot.com -
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emmlyn said:
What hedge funds are investing in startup web 2.0 ventures?
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Hedge Fund said:
I have heard of a couple hedge funds in SF who invest in web 2.0 projects. I think if you go back and look at headlines from when facebook was being bid on you can pick up a few names there. I also mention this trend within this article on hedge fund managers: http://richard-wilson.blogspot.com/2007/10/hedge-fund-managers-pedigree.html
- Richard
Hedge Fund Consulting Blog
6 Trackbacks
3:13 pm
Kasi-Blog » Blog Archive » Microsoft paid very little for Facebook… said:
[...] with the news that two hedge funds invested another 500 million US-Dollars into Facebooks, it is quite clear why [...]
8:56 am
tech news blog » Linkpost | 10.26.2007 said:
[...] Facebook roundup: Hedge funds invest $500 million, and more and Memo to Mark: BoomTown Is Baaaack and We’re Still [...]
5:42 pm
VentureBeat » Facebook deal still hasn’t happened said:
[...] Yesterday, we pointed to a Forbes story saying that Facebook may have received $500 million from two New York hedge funds. [...]
5:42 pm
VentureBeat » Facebook deal still hasn’t happened said:
[...] Yesterday, we pointed to a Forbes story saying that Facebook may have received $500 million from two New York hedge funds. [...]
11:19 pm
VentureBeat » Facebook’s options not like they used to be said:
[...] employees, who are leaving to start their own companies. Some of them have been going to Facebook. We mentioned on Friday that Facebook tracks your every move on the site, including which profiles you look at — [...]
1:15 am
Facebook Investments Show The Company Is Not a Sure Bet — Facebook Observer said:
[...] went big. Microsoft invested a third of what they were reportedly interested in investing and the remaining 500 million that was raised came from two different hedges [...]