Popular social networking site, Facebook, sent nearly 2% of its stock to Russian-based Digital Sky Technologies. Digital Sky poured in $200 million after valuing Facebook at $10 billion. The Russians will not get a seat on Facebook’s board with the stake.
Digital Sky’s valuation of the website is less than the $15 billion valuation made by Microsot in 2007 when it spent $240 million for a 1.6% stake.
Facebook’s growth has been more rapid since then and is considered as the most popular social networking site overtaking MySpace. Facebook currently has 200 million users with 70 percent of whom live outside the U.S.
Chief Executive Mark Zuckerberg said an IPO is “not something we are rushing toward.”
The greatest criticism to Facebook’s business model is its failure to capitalize on its user base. Facebook has still yet to make profit from it’s existing set-up. The fresh flow of cash allows Facebook a source of funds for expansion and developer.
