Will MSFT’s backing of Facebook be akin to the day and age when Yahoo! backed Google? That was undoubtedly a turning point for Google and maybe Microsoft’s agreement to invest in a minority stake worth $240M valuing Facebook at $15B might mean the same thing.
All I know is MSFT is showing some backbone - perhaps foolishly - by not letting Google outbid it, though let’s face it: Mark Zuckerberg is not eyeing MySpace in his cross hairs, he views Google (right now somewhat naively and foolishly) as his main target, and he’s betting that MSFT can help him beat Google in all things Web. Will that happen? Who knows, but clearly he does not view MSFT as a foe, but he knows that Google can on a whim destroy Facebook in many ways, and some of those we’ve outlined previously.
Let’s just hope that Facebook does not totally close the door on a potential exit with this deal, as we outlined earlier today.
Anyway, why $240M? Here’s why: rumor has it that Facebook shareholders own less than 27% of the company (according to Valleywag), so a $240M investment on a post-money investment of $15B implies MSFT gets a 1.6% stake, not much… which is key for shareholders not to slip below 25%. I’m guessing on all of this, but it would make sense… despite what some VCs say about there not being actual minimum holdings, psychology is a big factor in driving valuations…
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