Russian Firm Invests $200M in Facebook
Facebook Inc. announced that Digital Sky Technologies, a Russian Internet-investment group, has invested $200 million in the social-networking company, which represents almost a 2% equity stake at a $10 billion valuation as reported by the Wall Street Journal's Venture Capital Dispatch.
The Wall Street Journal first reported the offer on May 23, 2009. The article stated:
Digital Sky Technologies, a Russian Internet-investment group, has offered to invest $200 million in Facebook Inc. at a $10 billion valuation for the company's preferred stock, according to people familiar with the matter.
Venture Capital Dispatch said that Digital Sky is run by Russian businessman and Internet investor Yuri Milner. It owns pieces of a number of Russian Internet properties, including Russia’s largest Web site, Mail.ru, and a Polish social-networking site.
VentureBeat said that on a conference call with reporters on May 26, 2009, Mark Zuckerberg, the CEO of Facebook, said this about Digital Sky:
One of the things that’s most interesting about [Digital Sky] is in their portfolio they have a large number of social networks. Each is able to monetize in different ways but all are effective.
Yuri Milner, chief executive of DST, said on the call via VentureBeat about the reason he invested in Facebook:
We have a unique perspective on this investment because we see something that other people don’t see, because we see the monetization profiles of our other social networks. We’re fanatic believers in social networks. We’re investors in five in Russia and Eastern Europe — an area with 250 million people. Only 60-70 million are online. Facebook has a much bigger audience, while we have expertise in building smaller sites.
Russia has world-class programmers. Vkontakti [Ed. a site that launched as a Facebook clone] has launched features like search that have made it a top search engine in the country. Micropayments are also working. For example, a small number of people are willing to pay a lot of money for value-added services, like registration.
Venture Capital Dispatch ended by writing:
The company [Facebook] is forecasting revenue growth of at least 70% in 2009, putting revenue around $500 million or more, according to people familiar with the company's finances. The social network, which has more than 200 million active users, expects to be cash-flow positive in 2010, according to these people.
