Facebook is reportedly receiving a combined total of $500 million in new investment money with $450 million coming from Goldman Sachs and another $50 million from Russia’s Digital Sky Technologies.
This is all happening based on a jaw dropping $50 billion valuation of Facebook.
Speculation as to what is going to be done with this money runs a wide range.
The first thing Facebook’s likely to do with its $2 billion in new funding is to cash out some of its existing investors and employees. The social network previously did this when DST bought $200 million in Facebook stock from its employees. Some of its early investors may also reach into the $2 billion pot and cash out.
Once that’s done, it’s all about growth.
The $2 billion number in the last quote? That comes from another funding effort that will be headed up by Goldman Sachs. In true Wall Street fashion there are special code words.
Goldman Sachs will help Facebook raise an additional $1.5 billion through a “special purpose vehicle” designed to allow outside investors to indirectly invest in the company.
Since there is speculation about just how much more room Facebook has in allowing further investment without requiring it go public this is an interesting aspect of the story but one that we will probably never really know.
Another more practical angle on what might be on the horizon
From Search Engine Land
Imagine that Facebook were to become convinced that having its own search engine was a key to delivering a better user experience overall, as well as generating new ad revenue. One obvious and immediate possibility would be to buy Blekko, which has pushed social integration with Facebook Likes further than Microsoft itself.
So while the rest of the economy is still in chaos and stuck in neutral on its best day, Facebook is looking good. Interestingly enough, it is looking good with help from a company that took $10 billion in TARP funds back in 2008 when its chief executive said it wasn’t in real trouble (it paid back those funds in about 6 months just before executive bonus season) and it recently paid $550 million in fines for misleading investors.
With a culture like that and the way Facebook views its users privacy these bedfellows are not strange at all. In fact, they appear to be ‘two peas in a pod’ and one can only imagine what lies ahead for the Wall Street robber barons and the Internet’s privacy barons. Sounds like fun!
So remember, that when you are using Facebook it may make sense to think of that great phrase “Your tax dollars hard at work!”.
What’s your take on what’s next for Facebook? Is a search engine in the making? Will that IPO finally happen? Will a select few get very rich?
Let us know your thoughts.