A Russian Internet company announced today that it will be investing $200 million in Facebook, valuing the social network—which has yet to turn a profit—at roughly $10 billion. In 2007, when Microsoft invested $240 million in the startup, it was valued at $15 billion. Facebook's internal valuation pegs the company at around $3.7 billion in worth.
Valuing companies isn't an exact science; there are hard numbers involved (revenue) and soft ones, too (brand value). The real answer could only come with an IPO, which founder Mark Zuckerberg said Tuesday is not something they company is going to do in the near-term, according to the AP. Clues to the company's worth lie in its its balance sheet, which is kept undisclosed as long as Facebook is private.
Zuckerberg has claimed that Facebook will grow its revenue by 70 percent in 2009, but most experts see that prediction as quixotic, and doubt the site will be able to get much past 20%, or $300 million more this year. Yuri Milner, CEO of Digital Sky (seen below), the Russian company that announced its investment today, said his company would also be buying an additional $100 million of common stock in the Palo Alto company. Digital Sky owns a popular social network in Russia called @mail.ru.
The internal valuation figure leaked from the ConnectU-Facebook lawsuit last year; to tally up what ConnectU's founders thought they deserved, its lawyers managed to get their hands on Facebook's "formal valuation resolution," a value required to appraise the options a company gives its employees, under IRS Section 409(A). $3.7 billion was the number on that document. But since we don't know how much stock has been issued—and what kind—it's still tought to put a real value on the company. What's guaranteed: Facebook will be facing stiff competition from other platforms this year, making its rosy revenue projections even more unlikely.
See Facebook's official press release on the DST investment here.