Noodling on LinkedIn's millions

Noodling on LinkedIn's millions

Summary: The news that LinkedIn has raised another $22.7 million (total inbound investment $100 million) has me thinking.

TOPICS: Banking

The news that LinkedIn has raised another $22.7 million (total inbound investment $100 million) has me thinking. TechCrunch says the money was raised just before the credit crunch and banking collapse of last month but even so, this is an extraordinary achievement. There were signs that things were turning rough around the timing of this investment so I'm not sure why TechCrunch should make a point of this.

The key to understanding this comes in the lineup of investors and what they are saying. Per the release: "Goldman Sachs; The McGraw-Hill Companies; and SAP Ventures, a division of SAP AG; as well as a re-investment by Bessemer Venture Partners." These are all savvy investors that will have undertaken careful due diligence. Not for these guys the smash and grab that one so often hears about from Silicon Valley VCs.

Doug Higgins of SAP Ventures was quoted as saying: We made this investment because we believe that when Web 2.0 technologies are thoughtfully applied to the enterprise, they can produce significant efficiencies for small, medium and large companies.” (My emphasis.)

I've been a LinkedIn user for some years but have never really used it although plenty of people have come to me looking for recommendations or connections. However, as the economy strains to find rays of sunshine, I expect to see an uptick in activity on this service.

Where LinkedIn scores (and FaceBook fails) is in the professional nature of the relationships you're likely to create and develop, coupled to the richness of reputation data. This makes far more sense to business people than the indiscriminate friending that occurs on the consumer social networks.

Despite past attempts to write off LinkedIn as an irrelevant walled garden, the fact remains it has been profitable since 2006. Solid business applications usually are and even though the earlier Series D valued it at $1 billion, a figure that now looks like the stuff of fairy tales, raising more money now is a wise move.

As always in investment, quality counts. In business applications, the same applies. Don't be surprised to see LinkedIn turning out as more profitable in the downturn (in contrast to consumer spend based networks) and using its recent round of funding for enterprise style acquisitions.

Update: Here's another reason why LinkedIn will do better than Facebook. What idiot is going to do this on LinkedIn?

Topic: Banking

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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  • Linked In as a Networking tool.

    Linked in has a lot of value as both a Networking tool and a professional resource.
    It keeps people in touch with those who they have worked with in the past, which gives you a great oppertunity to go back to the well of people you knew for help and advise long after you and they may have moved on.
    It also gives you insight into new connections with recommendations on a professional level. Great place to go shopping for that advice and adviser you find you need in business.
    And for sales people, it can be invaluable. When a sales team I was working with had encountered a shift in the management of a client they were pitching, I was able to produce the new guy's resume (From Linked In) within an hour. This gave the sales team context about the new executive they were looking to pitch to. And it gave them the chance to modify the pitch to more closely align with that persons professional stated business goals.

    No, it is not fool proof (nothing is). But it is much more valuable then almost any other "Fast contact" resource I have seen.

    Just my $.01