NY Times Reports $500-Million Investment In FB By Goldman Sachs and Private Russian Investor
Facebook.com has reportedly received a massive infusion of capital, according to the New York Times today, in a $500-million investment from Goldman Sachs and a private Russian investor. No word about whether the investor is also vested in Facebook’s Russian counterpart,VKontake.ru. The deal puts the value of Facebook at $50-billion.
The size of the investment will likely mean the people at Facebook will have to open their financial books, at least to the investors and to the Securities and Exchange Commission, which will want transparency of numbers, due to the large amount of money involved and the type of investors involved.
According to our own corporate counsel, Donnie Goodwin, when the numbers get this potent, whether a company is public or not, regulators have the option of requiring Facebook to provide investors a sealed prospectus that details the most intimate data of the company’s financial records. Some of those records may include proprietary information about Facebook’s development and investment plans, information not available to the general public.
The half-billion dollar investment marks a major wake-up call for Google, which has been, essentially, the big man on campus for several years. While Google’s market capitalization is nearly $200-billion, the fact Facebook has attracted such a massive investment, from such a savvy firm, is a clear shot across the bow of Mountain View, California.
Money aside, the traffic numbers also tell the story. Google has continued to enjoy an ever-increasing flow of traffic because of strategic acquisitions that have broadened its market share, but the recently-failed attempt to purchase Groupon.com shows Google’s money will not buy everything. The company’s business model, combined with the fact Facebook appears more vanguard than Google these days, means some companies will try to go it alone.
Groupon’s decision to spurn a $6-billion investment has been lauded by technophiles and business folk, alike. Now the company is courting groups of investors in a bid that could raise $950-million dollars, according to TechCrunch.com. The difference between Groupon.com and Facebook.com is the former is flirting with an IPO, while FB is not.
Whether IPO or not, however, the big numbers at both FB and Groupon mean we may learn more about the true financial stamina behind each company. Federal laws requiring disclosure of financial records to investors could mean a leak and sneak peak into the true financial power behind each company. After all, corporate secrets are increasingly fleeting, when the corporations become this big.