Facebook is now worth more than $US50 billion, eclipsing the worth of internet giants such as Yahoo and eBay, after Goldman Sachs and Digital Sky Technologies pumped a further $US500 million in a new funding round.
The report also comes as Twitter co-founder Biz Stone has revealed Facebook once offered to acquire the micro-blogging company for $US500 million, but was turned down.
As reported by Bloomberg, Goldman Sachs has invested $US450 million in the social networking giant, with Digital Sky Technologies investing the other $US50 million. DST has previously invested $US200 million in the company and once fought for a seat on the company’s board.
According to the report, Goldman Sachs has also offered some of its wealthiest clients the chance to invest in the company, with a view to raise a possible further $US1.5 billion.
This latest investment means Facebook, which reportedly turned over revenue of about $US2 billion in 2010, is now worth more than other internet giants including eBay or Yahoo. The move will presumably increase Zuckerberg’s own fortune, given his current valuation provided by Forbes was only $US6.9 billion from a company valuation of $US23 billion.
And while experts point out the American Securities and Exchange Commission may have problems with this due to laws requiring companies with over 499 investors to disclose financial statements, others say the investors will only count as one individual – Goldman Sachs.
The SEC has already begun to investigate some other companies that it feels may be sidelining this requirement.
“This is not the first time they are doing this,” one source told the New York Times, adding that Goldman Sachs believes it can get through this requirement fairly easily.
The NYT has reported that wealthy investors would need to put forward a minimum of $US2 million and they would be banned from selling their shares until 2013.
Experts have pointed out that by investing in the company Goldman Sachs is positioning itself to handle Facebook’s IPO, although executives from the social network, including chief Mark Zuckerberg, have said a public offer won’t occur until at least 2012.
But despite Facebook’s relatively low revenue given the recent valuation, it maintains its position as one of the most popular websites in the world. According to Experian Hitwise data Facebook was the most visited website in the US during 2010, and recorded 8.9% of all US web visits between January and November – Google only recorded 7.2%.
Meanwhile, Twitter co-founder Biz Stone has told the Financial Times that his company once refused a $US500 million acquisition offer from Facebook due to a desire to expand the company on their own terms.
“We’ve created something that people are finding value in,” he said. “But we haven’t yet created a business out of this, and we really wanted to do that.”
It is understood the deal was that Twitter would be offered $US500 million in Facebook stock. But Stone said he and the other founders wanted to pursue making Twitter a viable company.
Twitter has continued to grow over the past two years with 175 million registered users and over 25 billion tweets sent in 2010, and has also begun recording revenue through premium advertising programs. However, the company has not yet recorded a profit.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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