Silicon Valley fund invests $US120m in Facebook

A Silicon Valley private equity fund co-founded by U2 frontman Bono has reportedly made a $US120 million investment in Facebook, valuing the social networking giant at as much as $US14 billion. But while the deal is good news for the social networking giant, it could mean an IPO will be even further down the line […]

Patrick Stafford 29 June, 2010

A Silicon Valley private equity fund co-founded by U2 frontman Bono has reportedly made a $US120 million investment in Facebook, valuing the social networking giant at as much as $US14 billion.

But while the deal is good news for the social networking giant, it could mean an IPO will be even further down the line as the company continues its growth with external funding.

Tech blog TechCrunch reported Elevation Partners made the investment in the past few days, according to a letter sent to the company’s partners. It purchased five million shares for $US120 million, bringing its total number of shares to 7.5 million.

The blog is reporting that the investment values Facebook at $US14 billion, although secondary trading markets show Facebook’s value is higher than $US24 billion.

Facebook chief executive Mark Zuckerberg also confirmed recently that the site is recording revenue of about $US1 billion.

EP’s founders, Roger McNamee and Bono, are both personal investors in Facebook, while partner Mark Bodnick’s sister-in-law, Sheryl Sandberg, works as the social network’s chief operating officer.

The deal with Facebook also means it can delay an IPO even longer. Zuckerberg has been publically hesitant to float the social network, saying that it has no need for the cash given its performance on secondary trading markets.

But the investment also comes as EP is changing its investment strategy.

One of the company’s biggest ventures, a 20% stake worth $US100 million in handset manufacturer Palm, failed to produce any significant benefit. While EP didn’t lose any money during Palm’s sale to Hewlett Packard, it is now looking for more growth-oriented companies in the web 2.0 space.

The company also invested in Forbes Media with a stake reportedly worth $US250 million, along with some investments in SDI Media group and video game publisher Electronic Arts. However, analysts now expect the company to invest in growth-oriented social websites, following from its investment in user-review site Yelp.