Facebook Starts the Year With $50 Billion Valuation by Goldman Sachs

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Social Media Titan Facebook can’t have better start of the year than this; leader in social networking has grabbed another round of funding by the Goldman Sachs and a Russian Investor who have invested $500 Million with company valuation of $50 Billion, according to sources. With new valuation figure, Facebook leads than YouTube, eBay and Time Warner.

Facebook is already sitting on the overall investment of $800 million and with this new round of funding it will over exceed 1 Billion investment marks. Interestingly, the new round of funding will not only boost the valuation of company but will also put Mark Zuckerberg, Co-Founder and CEO of Facebook, in a league with Larry Page and Sergey Bin – Founders of Google- which are reportedly worth $15 Billion. Mark Zuckerberg, recently titled as Time Person of the Year 2010, was holding his personal fortune worth $6.9 billion at the timer when Facebook was valued $23 Billion. Doubling the valuation of Facebook, Mark’s personal valuation may also jump to 100%.

As per the NYT, Goldman Sachs, a first time investor in Facebook, has injected $450 Million and rest 50 Million will come from a Russian investment firm Digital Sky Technology. Interestingly Digital Sky Technology has already poured about half a billion dollars in Facebook till date.

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The other side of this investment holds regulatory benefit for Facebook. With first ever investment in Facebook, Goldman Sachs will also create a “special purpose vehicle” which will allow Facebook to raise further round of investments without disclosing its financials. As per the S.E.C., any company which has more than 499 investors will have to expose its financial results to public. As Facebook don’t carry any plan to go public before 2012, “special purpose vehicle” will channelize the new investments through Goldman Sachs into Facebook but will be counted as a single investor.

The pressure to go public is already mounting on all social media companies like Facebook, Twitter, Groupon, Zygna and many others who are witnessing enormous growth in last couple of months and have raised sizable investments in multiple rounds. An enquiry has already been triggered by Security Exchange Commission on such companies to avoid any improper use of private investment market to get around public discloser requirements.

The new round of investment will be used to strengthen company’s human resources, steal many more top brains from industry, focus on improvisation of Facebook features & new development and, probably, few new acquisitions.

By all the means, Google will be closely monitoring all the such development related to Facebook as company is facing stiff competition for long time. Recently Google lagged behind to Facebook for second position in search terms in U.S. and lost many top executives only to drive Facebook.

With so much to talk and observe, it will be interesting to monitor any further development and Google’s position in this space.

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