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LinkedIn gets $1 bln valuation on way to IPO

Financial trends and news by John Shinal
June 18, 2008 last edited July 10, 2008
Short URL: http://vator.tv/n/29f

LinkedIn looks like it's in an all-out race with Facebook to be the first social network to go public.

The site focused on business relationships has raised a $53 million round at a valuation of just over $1 billion, according to various online reports.

The latest fundraising, most from existing investors who've already put in $27 million, looks like a major step on LinkedIn's way to an IPO.

While it still might solicit or attract smaller investments in the future, at that valuation it's going to be hard to raise another large round of private equity to fund its growth. 

Founder Reid Hoffman said as much to VentureBeat when he spoke of the company's discussions regarding going public.

The only thing that might prevent LinkedIn's march to the public markets is if the company is acquired. But given that LinkedIn has reportedly turned down buyout offers in the past, my guess is we're more likely to see it go public in a year or two

While the valuation isn't quite the size of the $15 billion that Facebook achieved when it took a $240 million round from Microsoft, it shows that social networks aren't all about personal expression. And, like the Facebook round, it reaffirms what a bargain Fox Interactive got when it bought MySpace for $580 million.

LinkedIn is growing faster than either Facebook or MySpace, albeit from a smaller base. LinkedIn has 23 million registered users, up more than 360% from a year ago, according to Nielsen, which also has counted 9 million unique monthly visitors.

Reports have pegged its revenue at over $100 million. 

The average household income of LinkedIn members is $140,000, according to a presentation by LinkedIn's Brandon Duncan. The presentation embedded in this video, Duncan tells independent application developers that the company gets it revenue from sponsorships and does not have to rely on advertising.

The site has branched out from its social network roots to offer company profiles, targeted job listings and other features aimed at businesses.

It's also building a developer platform that could allow it or others to develop business applications that can be customized with data from users on the site.

Much has been said about how social networks will transform the corporate world from the inside out, as users of such sites begin to use them for business as well as personal networking.

But while MySpace and Facebook can move in that direction, they have spent the majority of their engineering resources so far on developer platforms that are being used to build non-business applications that so far haven't attracted a lot of brand advertisers.

LinkedIn, meanwhile, has had the business user wired into its DNA from day one. If brand advertisers  want to target that demographic, LinkedIn looks to be in the best position to garner those ad dollars down the road.