Facebook Jan. 21 grabbed $1.5 billion in funding from Goldman Sachs and Digital Sky Technologies, stoking the social networking for gritty competition vs. Google in 2011.
Facebook said
Jan. 21 it has raised $1.5 billion in funding from Goldman Sachs and Digital
Sky Technologies, which brings the social-networking company's value to $50
billion.
Goldman Sachs
clients overseas invested $1 billion in Facebook Class A common stock
in a funding round that closed Jan. 21. The latest investment follows a $500
million infusion in December by Digital Sky Technologies, the Goldman Sachs
Group and funds managed by Goldman Sachs.
Facebook could
accept $375 million to $1.5 billion from the Goldman Sachs overseas offering.
While the offering was oversubscribed, Facebook decided to limit the offering
to $1 billion.
Facebook said
in a statement that, while it has no immediate plans for the funds, it took the
money to bolster its cash reserves and to "build and expand its
operations."
The funding round is
overshadowed by controversy in the investment world. Goldman limited the
offering to overseas investors because the firm was concerned that recent media
coverage could have violated securities guidelines installed to rule private
investments. The move angered Goldman's U.S. clients.
Facebook is
not a public company; however, it was revealed this month that regulators are
concerned by the considerable amount of interest it, LinkedIn and other
Internet companies were drawing in privately traded shares.
The Securities
and Exchange Commission requires companies with more than 499 shareholders to
disclose financial information whether they are publicly traded or not.
Facebook said
it expected to have more than 500 shareholders in 2011, and many expect the company to schedule an initial
public offering by April 30, 2012, because it will have to disclose its
finances under SEC rule.
That date
comes 120 days after the first fiscal year in which a company exceeds the 500-shareholder
threshold. Facebook's fiscal year ends Dec. 31, so the latest possible date
would be April 30, 2012.
A Facebook IPO
would be the hottest since Google went public in 2004, ironically under similar
circumstances regarding the 500-shareholder threshold.
With 600
million-plus users, whose user engagement exceeds the amount of time spent online at Google
and other Internet destinations, the social network has emerged as a powerful rival
on the Web.
The company's
online advertising revenue has grown exponentially as well, rising to $1.86 billion in 2010 from $740 million
in 2009.
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