Source: Financial Times
The biggest online social network intended for professional use has been valued at more than $1bn, putting it among a small group of private internet companies to have crossed that threshold before going public.
LinkedIn, whose members use the site to do things such as making professional contacts, recruiting staff or finding new jobs, said it had raised $53m from a group of venture capitalists led by Bain Capital, taking the total raised to $80m in all.
The latest investment, for about 5 per cent of the company, gives LinkedIn a “pre-money” valuation of $1.015bn, said Dan Nye, chief executive.
Though it pales beside the $15bn valuation for Facebook implied by a Microsoft investment of $240m last year, the latest stake in LinkedIn is still one of the most eye-catching investments in the fast-growing social networking business.
News Corp paid $580m for the parent company of MySpace, then with 17m members in the US, just as the social networking boom was taking off three years ago. This year, AOL paid $850m for Bebo, which claims more than 40m members.
Asked if he had held talks about selling out to a bigger media company, Mr Nye said LinkedIn “had discussions with the cast of characters” but decided to go it alone because of the company’s significant growth potential.
Launched in 2003 by Reid Hoffman, a veteran of online payment company PayPal, the network has 23m members, with more than 1m new ones joining each month. Though it has its headquarters in Silicon Valley, it also claims to operate the largest online professional network in Europe.
The company’s record in finding ways to make money sets it apart from other social networks that have struggled to meet high expectations for advertising revenue, said Jeff Glass, a partner of Bain Capital.
Besides carrying job advertising, LinkedIn charges members a subscription for “premium” services that let them do things like make professional introductions through the network.
It also has a “software as a service” business, charging a subscription to corporate recruiters to help them manage their hiring on the site.
It will generate revenues of $75m-$100m this year, more than double 2007, Mr Nye predicted.
The company has been profitable since 2006 and raised its latest round of capital to strengthen its balance sheet rather than to fund operations, he added