4 Dec, 2007
Facebook has raised $US60 million from Hong Kong billionaire Li Ka-shing, adding to the list of financial heavyweights backing the online hangout's rapid growth.
Li, 79, will receive a 0.4 per cent stake in Palo Alto-based Facebook in return for his investment, according to a person familiar with the matter who requested anonymity.
The cash is coming from Li's personal foundation, the person said. The billionaire's business interests, anchored by the Hong Kong conglomerate Hutchison Whampoa, are not involved.
The investment means the three-year-old start-up now has support from both the richest man in Asia and the world's largest software maker, Microsoft, which paid $US240 million for a 1.6 per cent stake in October.
With an estimated $US23 billion fortune, Li is the ninth wealthiest individual worldwide, based on estimates gathered in an annual survey by Forbes magazine.
Li, nicknamed Superman in Hong Kong, has close ties with authorities in Beijing and is one of Asia's leading philanthropists.
The stakes acquired by Li and Microsoft imply a $US15 billion value for Facebook, which is privately held. That valuation presumes the company will substantially increase its revenue, which is expected to exceed $US150 million this year.
Facebook hopes to boost its profits with new ways for advertisers to connect with its audience of 55 million users, now the second largest social network on the web behind News Corp's MySpace.com.
A marketing initiative called Beacon, which Facebook introduced last month, agitated thousands of users because it circulated potentially sensitive information about their online purchases and other activity.
Stung by the backlash, Facebook last week promised it would no longer share any information collected in the Beacon program unless users gave their explicit permission.
Facebook may raise as much as $US200 million more to help fund a plan to more than double its work force of 300 during the next year. The company has explored selling small stakes to private equity firms but hasn't been able to settle on terms.
One possible sticking point has been Facebook's reluctance to give major investors a seat on its board of directors. Neither Microsoft nor Li gained a seat in exchange for investing.
Facebook's fundraising window will likely close in late January, according to the person familiar with Li's investment.
Chief Financial Officer Gideon Yu said at a conference last month that this will probably be the last time Facebook seeks out additional investors as a privately owned company.
Facebook hasn't set a timetable for going public, but Silicon Valley cognoscenti are betting the company will launch an initial public offering of stock in 2009.
Before tapping Microsoft and Li for cash, Facebook had raised $US40.7 million from Peter Thiel, a co-founder of online payment provider PayPal, and venture capital firms Accel Partners, Greylock Partners and Meritech Capital Partners.
Facebook's largest shareholder is its chief executive and co-founder, Mark Zuckerberg, whose stake is worth $US3 billion , based on the value of Microsoft's and Li's investments.
