Can you imagine being a venture capital sitting down with Facebook founder Mark Zuckerberg about raising another round of private equity? You desperately want in on the hottest investment opportunity since Google but you’ll have to settle for a super-high valuation ($6-billion to $10-billion) to participate.
What do you do? Do you bite on the belief that Facebook’s exit (IPO or sale) will be a higher valuation, or pass because the deal seems too expensive. My take is any VC given the opportunity to get into Facebook will jump hard regardless of the valuation.
It is interesting that Facebook is considering another financing given it will apparently have revenue of $150-million and high profit margins. Kara Swisher suggests they will use the money for growth, acquisitions and perhaps provide Zuckerberg and some the company’s early investors some liquidity.