News In Brief

Facebook snags $500 million investment from Goldman Sachs and Russian investors

Jaclyn Giovis Jan 3, 2011

Facebook, the popular social networking site, is gaining some serious “street” cred — as in Wall Street.

The company has raised $500 million from investment bank Goldman Sachs and a Russian investor in a deal that values the company at $50 billion, according to a New York Times report. That means Facebook is now worth more than eBay, Yahoo and Time Warner.

Facebook makes money by selling ads and virtual games that require online participants to pay real money if they want to excel. An investment by Wall Street veteran Goldman Sachs means the company is more than fun and games for millions of so-called friends – it’s big business.

Justin Urquhart Stewart, marketing director at Seven Investment Management in London calls Facebook’s evolution “fascinating.”

“The very fact you then get someone like Goldman Sachs taking interest in it, now you realized this has just moved from something that’s interesting entertainment for the younger generation, into something that is a very serious business opportunity,” said Stewart, in an interview with Marketplace’s Scott Tong.

Often when a company attracts a sizable investment from an established investment bank it signals the likelihood that the company soon will go public. That’s because as private companies such as Facebook get more public investors, the U.S. Securities and Exchange Commission requires certain financial disclosures.

Financial results must be reported once a company has more than 500 shareholders. So the thinking is, once that information becomes public information, you may as well trade your shares on the public market.

But Facebook is wary of such a move.

“There’s a certain irony that Facebook which is based on everyone telling everyone everything about themselves really, really, really wants to stay private,” said Staci Kramer, editor of “They don’t want to issue their results. They don’t want to be responsible for the kinds of things that you have to do when you’re a public company.”

Facebook founder and CEO Mark Zuckerberg, once the less-than-public entrepreneur, has been pushed into the spotlight for debate about online privacy matters. Last year, a movie about Facebook, called The Social Network, debuted in theaters nationwide. Zuckerberg also earned Time Magazine’s annual “Person of the Year” award.

Listen to Scott Tong’s report on Goldman Sachs and Facebook.

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