Posted by: Rob Hof on October 25, 2007
And I don’t mean ridiculous for Facebook, which might as well take any money that’s green. But I can’t understand why two hedge funds would invest an additional $500 million in Facebook, on top of Microsoft’s $240 million announced yesterday, as Elizabeth Corcoran reports on a Forbes blog. Microsoft gets multiple strategic benefits from its investment, as I wrote yesterday. But how on Earth can any self-respecting hedge fund expect to get a reasonably near-term return on a $15 billion valuation on a company with an expected $150 million in sales this year? For all of Facebook’s evident momentum and utility, a $15 billion exit via acquisition or initial public stock offering is iffy enough at this point. To get a return, the funds would have to see that valuation rise significantly higher than that, right? Sorry, I don’t get it. Neither do a lot of other people. Of course, Facebook hasn’t announced this additional funding yet, so we’ll have to see if it actually happens.
Update: Larry Aragon at Private Equity Hub says the report about the hedge funds may not be true. If so… never mind.