Facebook, the half-a-billion-dollar kid

Posted: April 20, 2006 in Uncategorized

SAN FRANCISCO (MarketWatch) — This startup thing sure beats sitting in class.

Mark Zuckerberg, who started the Facebook — essentially an online student directory — while he was a sophomore at Harvard in 2004 — just received funding for quite a nice valuation. Zuckerberg, as many of my readers might recall, left Harvard to become an entrepreneur.

Facebook, which now has more than 7 million registered users, recently received $25 million in venture funding from Greylock Partners, of San Mateo.

The valuation for the private firm was $550 million, a source close to the deal told me.

Viacom Inc. /quotes/comstock/13*!via/quotes/nls/via (VIA 37.27, +0.48, +1.30%) offered Facebook $750 million for the entire company earlier this year, according to the source. For Facebook’s right to maintain its independence, a half billion dollar valuation is just fine. What does that say about Internet valuations? They remain high.

If we also compare Facebook’s valuation and MySpace’s valuation, and the number of registered members each site had at the time they received valuations, it appears that prices are going up.

Last year, on July 18, News Corp /quotes/comstock/15*!nws/quotes/nls/nws (NWS 14.72, +0.20, +1.38%) announced that it purchased MySpace for $580 million in cash. At the time, MySpace said it had 18.5 million members from the coveted 16-to-34-year-old demographic group. Facebook has about a third of that registered user base, but received about the same amount of money. Facebook’s valuation certainly makes News Corp purchase appear relatively reasonable.

Suffice it to say, it’s a good time to be an entrepreneur.

And, for Mark, who will turn 22 next month, it’s a nice way to celebrate his birthday. Maybe his staff of 100 — mostly 20-somethings, will throw him a party.




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