Investment fund GSV Capital has bought 225,000 shares in Facebook at an average price of $29.28 each. The $6,587,500 investment gives the social network a valuation of about $70 billion, and represents about 15 percent of GSV's total portfolio.
California-based GSV Capital says its mission is to "identify and invest in the premier VC backed private companies in the marketplace today — at attractive valuations." The company noted that the purchase of Facebook shares is subject to certain closing conditions, including a 30-day "Right of First Refusal" (ROFR) expiration.
"Facebook is a one-of-a-kind business which has created enormous network effects. With over 650 million people on its platform, or approximately 1/10 of the world's population, Facebook has established itself as a next generation social communications platform," Michael T. Moe, GSV Capital's CEO and founder, said in a statement. "GSV leveraged its network to quickly execute the transaction, entering the agreement to purchase shares of Facebook shortly after the close of our company's initial public offering. This is a true testament to the strength of our team and a great example of how we intend to quickly seize opportunities on behalf of our investors."
Facebook is going public next year, possibly as soon as Q1 2012. Last month, we heard that Facebook's business was growing faster than previously forecasted and the company's profits were increasing quickly enough to make a valuation of $100 billion justifiable.
Nobody has invested in Facebook at a $100 billion valuation though. Two months ago, a private-market transaction of 100,000 shares of Facebook Class B Common Stock priced at $32.00 apiece gave the website a valuation of $80 billion. Three months ago, Facebook was valued at $65 billion, when investment firm General Atlantic reportedly bought 0.1 percent of Facebook by purchasing roughly 2.5 million Facebook shares from former Facebook employees. Four months ago, Kleiner Perkins Caufield & Byers (KPCB) invested $38 million in Facebook, which was only worth 0.00073 percent of the social network, but still resulted in a valuation of $52 billion.
All these valuations should be compared to $50 billion, because this is the only number that Facebook officially confirmed. Five months ago, the company announced that it had raised $1.5 billion at a valuation of approximately $50 billion, but that it had no immediate plans for the funds and would simply continue to build and expand its operations.
The transaction consisted of two parts: in January 2011, Goldman Sachs completed an oversubscribed offering to its non-US clients in a fund that invested $1 billion in Facebook Class A common stock, while in December 2010, Digital Sky Technologies, The Goldman Sachs Group, and funds managed by Goldman Sachs, invested $500 million in Facebook Class A common stock at the same valuation.
So to summarize, according to Facebook it has a valuation of at least $50 billion, the latest valuation from third party investors is $70 billion, and the highest valuation private markets have given the social network has been $80 billion. Speculation is that Facebook will be valued at somewhere near $100 billion when it goes public.