Question from reader…
Q: Do you think Microsoft and other investors invested in Facebook at a lower valuation than the reported $15B?
A: Yes and no.
I think MSFT invested at the $15B valuation, but then the Samwer brothers and Li Ka-shing probably managed to get their stakes at a lower valuation. However, to pull this off, the transaction had to be delicate. I am not reporting on any so-called sources or anything, just my two cents and common sense: “smart/strategic investors” always try and sometimes get discounts. I think to get into Germany and China, I could see Facebook giving someone a lower valuation… but by lower, I do not see it being less than $10B. In fact, I don’t even think the valuation per se was $10B but the same $15B. What Mark Zuckerberg should have done, if he were as shrewd as some make him out to be, is to get the Chinese and German investors agree to $15B but then get an additional 25 or 33% options if they hit certain milestones…
This way, MSFT does not feel like they are fleeced - for they too are a strategic investor - but it gives Mr. Li and the Samwer brothers an incentive to drive Facebook’s entry and penetration in China and Germany.
So to answer your question, yes and no.
Subscribe: