Facebook scores $500 million investment, most visited site of 2010

Facebook, the world's most popular social networking site, has reportedly finalised a round of almost $500 million in funding from Goldman Sachs as questions about a possible IPO date begin to surface.

According to the New York Times today, Facebook has secured $500 million in funding from two partners: Goldman Sachs, a global investment firm, and Russian investment firm Digital Sky Technologies who've already invested in Facebook.

It's thought the investment, which is yet to be confirmed by the social network, has placed the value of the popular site at almost $50 billion and will allow Sachs to assist Facebook when the time comes for the site to become listed publically.

And in a move which could prevent the social network from having to disclose their financial position to the public as required in the United States when a company has more than 499 investors, Goldman Sachs may create what the New York Times calls a “special purpose vehicle” which they will manage as one investor, allowing multiple "high-net worth clients" to invest in the social network.

"Goldman is planning to create a “special purpose vehicle” to allow its high-net worth clients to invest in Facebook," the New York Times wrote.

"While the S.E.C. [Securities and Exchange Commission] requires companies with more than 499 investors to disclose their financial results to the public, Goldman’s proposed special purpose vehicle may be able get around such a rule because it would be managed by Goldman and considered just one investor, even though it could conceivably be pooling investments from thousands of clients."

It's not known how the S.E.C. feels about this move.

And in an ironic twist, the New York Times points out Sachs employees interested in looking at the popular site are unable to access it as a content filter company-wide prevents access to the social networking site when at work.

The news just keeps getting better for Facebook, with online analytics firm Hitwise today reporting the site overtook Google as the most visited website in the United States in 2010, commanding a 8.93% share. Google meanwhile still maintained the lead when all their properties including Gmail and YouTube are included, with a 9.85% share.

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You're telling me YouTube plus all of Google combined is 9.85% yet Facebook alone is nearly 9%? That is incredible

I still don't understand of giving marketers access to your personal information just so you can maintain a list of loose acquaintences you care very little to truly interact with besides writing on their wall about their poodle photos and Farmville progress. Giving Facebook an IPO just reminds me of pets.com. Yes, FB does get a lot in ad revenue. How is that going to work as a business model having just a single primary revenue stream? Yeah they sell FB and Farmville cards now which is not a very compelling way to interact FB. I would say that once again VC's are putting to much hope on the hype that FB will maintain their current pop culture status.

DATmafia said,
I still don't understand of giving marketers access to your personal information just so you can maintain a list of loose acquaintences you care very little to truly interact with besides writing on their wall about their poodle photos and Farmville progress.

It's cool if that's all you want to use Facebook for, but sounds like a waste to me. You could try maybe connecting with some actual friends.

Give it another 5 years and FB will rule the web. Its not going to go away, I for one like FB it allows me to connect with my friends and family all over the world on a daily basis... see pictures of my new baby cousins only minutes after they were born... yeah they have had privacy issues but if you are that worried about your privacy then stay offline and its not like they have your bank account number !!

Why would you invest this much money into something that will have its appeal burn off in a few years, look at Myspace and how fast it has died. In a way I'd like to see it die quickly, but it's giving me a ton of business for cleaning comps since it seems to be a haven for spyware.

Facebook is just now getting started, you will see millions of people start logging into websites with their facebook account. Only a small number knows about this. No more needing to register into every website. Then facebook text and webcam chat thru facebook is coming soon... you have no idea what is coming ahead..... is only a matter of time.

I have a feeling that Facebook is using Goldman as a vehicle to circumvent the SEC's "499 investors for private companies" rule. Goldman is most likely making this investment on behalf of their private wealth management clients who want a piece of Facebook. Yet, at the end of the day, the entire stake belongs to Goldman (at least on paper).

has placed the value of the popular site at almost $50 billion and will allow Sachs

All this unique bubble of virtual value could evaporate very fast. Its not like Sachs are not going to create a product destined to fail so that they could bet against it...

Should we be worried about what is going to happen when Facebook becomes a publically listed company? I feel like Zuckerberg has always been the gatekeeper of the original intention of the social networking site... Should we be worried about how our experience with the site will change if it's driven more and more for profit interests?

I ask the same question, but hopefully Mark decides to stay private.He has been called green color blind. He already turned down billions of dollars before.

I hope like heck that socially diseased site fails!! It is already to big for it's own britches!

Can't stand all the brain dead gibberish that goes on there.

Do have to give Zuckerberg credit for coming up with a scheme to get rich though.

I know how you feel. When mobile phones first came out I reacted the exact same way. Just thinking of all those mindless texts floating around these days ("hw r u?" etc.) makes me want to hurl!

My point is, Facebook is a networking and communication tool in much the same way that the mobile phone is. Like it or not, it's received enough recognition to be used by many people for many different reasons, and I can't see it going anywhere for the foreseeable future, especially with investments such as the one mentioned in the article above.

cork1958 said,
Can't stand all the brain dead gibberish that goes on there.
Speak for yourself, my friends don't post brain dead gibberish so it's always been OK for me!

Wow that was a great way to put it "etworking and communication tool in much the same way that the mobile phone is". I totally agree, social networking will be incorporated with our phones and pretty soon it will take over the mobile phones. Instead of texting we will facebook back and forth, instead of making a phone call we will webcam chat thru facebook/skype integration.

I'm kinda hoping there will be more true Facebook competition. When a company gets real big, and has little true competition, it starts to stagnate. All the other social network sites I've seen are either oriented to something in particular, or don't offer the same depth of features Facebook has.

Quikboy said,
I'm kinda hoping there will be more true Facebook competition. When a company gets real big, and has little true competition, it starts to stagnate. All the other social network sites I've seen are either oriented to something in particular, or don't offer the same depth of features Facebook has.

That's one thing that's impressed me with Facebook, they've been in the commanding position for years and if anything the site has got better in those times rather than resting on their laurels.

someday, its going to fall just like the others. When it comes to popular culture driven by something as unpredictable as the youth's interest, unlike banks, they are never too big to fail.

reidtheweed01 said,
someday, its going to fall just like the others. When it comes to popular culture driven by something as unpredictable as the youth's interest, unlike banks, they are never too big to fail.

Not sure about that.. unlike the others, people trade "facebooks" instead of phone numbers these days.

reidtheweed01 said,
someday, its going to fall just like the others. When it comes to popular culture driven by something as unpredictable as the youth's interest, unlike banks, they are never too big to fail.

Metabolism is the irresistible power in the universe, but I think it'll take a really long time for Facebook's fall. Just like a well-organized complicated system(not a skyscraper), growing bigger means it's getting more constant and more invincible. Think about it, Facebook has more than 500 million users in the world and the number is increasing every minute while we're talking here. What a giant social community, and the network becomes even more important referring to international communication. It's not for admiring Mr Zuckerberg's brilliant idea that people use Facebook, it is because Facebook is fantastic.

A.S.W said,

Metabolism is the irresistible power in the universe, but I think it'll take a really long time for Facebook's fall. Just like a well-organized complicated system(not a skyscraper), growing bigger means it's getting more constant and more invincible. Think about it, Facebook has more than 500 million users in the world and the number is increasing every minute while we're talking here. What a giant social community, and the network becomes even more important referring to international communication. It's not for admiring Mr Zuckerberg's brilliant idea that people use Facebook, it is because Facebook is fantastic.

Or until the next big social network comes along and facebook falls. Hell Myspace once had something like 350 million users. And now look at them.

/- Razorfold said,

Or until the next big social network comes along and facebook falls. Hell Myspace once had something like 350 million users. And now look at them.

Myspace is good but has a very strong commercial atmosphere which makes everyone sick. I don't use Myspace very much, I think it's not focusing on personal profile at the beginning, at least it isn't now. Myspace is a place where people share what they are interested in and what they care about, while Facebook is a place where you let people know who you are, what you did and what you're doing. During this strongly self-approval era, Facebook perfectly caters to the society.

I don't mean Facebook is immortal but just like what I said first, at least its death is not close...

reidtheweed01 said,
someday, its going to fall just like the others. When it comes to popular culture driven by something as unpredictable as the youth's interest, unlike banks, they are never too big to fail.

Facebook will be the next Google.

Hardcore Til I Die said,

Not sure about that.. unlike the others, people trade "facebooks" instead of phone numbers these days.

That's actually very, very true!

/- Razorfold said,

Or until the next big social network comes along and facebook falls. Hell Myspace once had something like 350 million users. And now look at them.

That was when social networking sites were new, even bebo was popular, facebook came out on top because it was just a lot more professional aesthetically and technically. No one is going to make the change from facebook to some other new site when all their 'friends', photos, videos and everything is archived on facebook.

/- Razorfold said,

Or until the next big social network comes along and facebook falls. Hell Myspace once had something like 350 million users. And now look at them.
They got to the top and just sat there, Facebook is constantly evolving.