Facebook raises $500 million in investment
Goldman Sachs, Sky Digital Technologies invest in the social networking site
Facebook has raised $500 million in investment from Goldman Sachs and Russian investment firm Digital Sky Technologies, in a deal that values the company at $50, according to the New York Times.
This investment means that Facebook is now valued at more than eBay and Yahoo.
The investment by Goldman Sachs will give Facebook the cash to enable them to develop new products and possible pursue acquisitions without becoming a publicly traded company.
The investment will also enable earlier Facebook investors to cash out their stakes.
The money may however pressure Facebook to go public, much like the popularity of Google and Microsoft shares forced them to go public.
Facebook's chief executive Mark Zuckerberg, has so far rubbished the idea of a public offering or sale of the company, but company insiders say that Facebook's board has indicated an intention to consider a public offering in 2012.
"When you think back to the early days of Google, they were kind of ignored by Wall Street investors, until it was time to go public," said Chris Sacca, an angel investor in Silicon Valley who is a former Google employee and a Twitter investor. "This time, the Street is smartening up. They realise there are true growth businesses out here. Facebook has become a real business, and investors are coming out here and saying, ‘We want a piece of it.'"
Goldman Sachs has already invested $450 million and Digital Sky Technologies has put around $50 million into Facebook. The Russian company had already invested around $500 million in the company and with the new deal Goldman Sachs can sell up to $75 million to them, which means Digital Sky Technologies has seen its original investment valued at $10 billion, increase fivefold.
As part of the new deal, Goldman Sachs must raise approximately $1.5 billion from investors for Facebook at the current valuation of $50 billion, according to the New York Times.
Facebook has approximately tripled its value over 2010, to $42.4 billion.