Facebook’s cashed-up backers turn their sights to start-ups
Sunday, May 20, 2012/
Facebook’s much-hyped float saw its shares gain just 0.97% to end at $US38.37, but the IPO looks set to be a boon for start-ups, as the company’s cashed-up founders and early investors look to sink funds into ventures such as Quora and Crowdmob.
One of the largest initial public offerings in history, Facebook’s share price was listed at $US38, which gave it a total share value of about $US104 billion ahead of the first day of trading on Friday.
However, the float was something of a damp squib, with an initial 11% surge followed by a dip that saw Facebook stock going dangerously close to dipping under $US38 a share. A late rally saw the social media giant end the day up nearly 1%.
This gives the company a higher market value than fellow tech giant Amazon.com, not to mention Kraft, Disney and McDonald’s.
Facebook’s stock began trading under the ticker symbol “FB” on the NASDAQ at opening on Friday.
Facebook’s founders and early investors already owned huge amounts of stock. Some held on to their stock, while others walked away with cash after selling shares at the IPO.
Eduardo Saverin, who co-founded Facebook along with Mark Zuckerberg, Dustin Moskovitz and Chris Hughes, owns less than 5% of Facebook’s shares but has a net worth of $US2 billion.
His stake was estimated to be worth more than $US3 billion upon Facebook going public.
Saverin has already invested in several start-ups including Qwiki and Jumio. His latest investment is Crowdmob, which blends app promotion with discounts from local merchants.
But perhaps the most promising start-up investor is venture capitalist Peter Thiel, who invested $US500,000 in Facebook back in 2004 and has an ownership stake of 2.5%.
Thiel planned to sell 16.8 million of his shares during the IPO, which means he might pocket more than $US600 million in cash.
In addition to co-founding PayPal, Thiel serves as president of global macro hedge fund Clarium Capital, and is a managing partner in The Founders Fund, a $US275 million venture capital fund.
Last year, Thiel offered $100,000 to 24 young entrepreneurs under the proviso they stay out of college for two years to further their business ideas.
Then in March, Thiel set up a $US40 million venture capital fund in partnership with the New Zealand Venture Investment Fund.
And earlier this week, it was revealed Q&A site Quora has raised $US50 million in a funding round led by Thiel.
Then there’s Sean Parker, who has a 4% ownership stake in Facebook. Parker is best known for co-founding online music store Napster.
Other companies Parker is involved in include The Founders Fund, fbFund, ooma, Causes, Plaxo, Yammer, Element Payment Services, Spotify and Airtime
Meanwhile, Moskowitz, who left Facebook in 2008 but has a 7.6% ownership stake, was expected to receive $US7.6 billion in liquid assets upon Facebook going public.
Moskowitz operates a start-up called Asana, which has raised more than $US10 million. Asana makes corporate management software, based on software Moskowitz designed at Facebook.
Facebook’s fourth co-founder – Chris Hughes – has also launched a start-up.
In December last year, it was revealed Hughes is launching a start-up media company that aims to spread “progressive content” virally online.
Hughes served as US President Barack Obama’s digital guru during the 2008 election, before launching Jumo in 2010, a philanthropic social network connecting individuals with good causes.