Back in November 2009 Elevation slid about $90 million over the negotiation table in exchange for 2.5 million shares in the world’s most popular social networking Web site, and has seen that investment multiply by two and a half times in value. So perhaps it’s not surprising that Elevation has just forked over another $120 million for a further five million shares at the moment–especially given the fact that the economy really seems to be recovering, and Facebook’s success has been continuing onwards and upwards with more users joining every day. Who wouldn’t want a big piece of one of the hottest Net properties in one of the hottest new Web-tech trends, social networking? And with your investment more than doubling in just eight months, Elevation’s hope has to be that its $210 million will quickly turn into $1 billion. TechCrunch also notes that two of Elevation’s founders–Bono and Roger MacNamee–already were personal investors in the social net, which may have added some extra sizzle to the business deals.
But does this move actually represent a shift in Elevation’s strategies? Because, if you recall, one of the high-profile venture firms behind Palm’s attempted smartphone resurgence over the last couple of years was Elevation Partners. Up until October 2007, Elevation had invested some $325 million in Palm, and added $100 million in December 2008 and additional cash in 2009 to bring its closing investment to around $460 million. That’s a huge sum to have tied up in a company that in many ways was on the ropes, its fight largely exhausted and its one hope for winning pinned on a single super high-tech market-changing smartphone (that in many ways was following Apple’s iPhone lead). As we know, this great experiment was a failure, and Elevation was lucky to make a meager profit of about $25 million for its multi-year investments in Palm. The future of Palm itself is now shrouded in mystery, as HP wraps its loving arms around what’s left of the business, and tries to leverage its tech into HP’s own products.
So did Elevation get its fingers burned by the fast-paced, high-risk smartphone industry? It’s possible–even cellphone giant Nokia has seen its mastery of the mobile phone biz take a serious hit by failures in the smartphone marketplace. Investing in Facebook is an interesting business strategy then, since despite Facebook’s successes, it is definitely mired in controversy over its free-wheeling thoughts on user data privacy, and the attitudes and habits of its high-profile CEO Mark Zuckerberg. And with Google leading the charge to compete with Facebook, and knowledge of how fragile Web-based business success can be (MySpace!) it’s hardly a “safe” haven for Elevation’s capital. Will the company be keeping an even closer eye on Facebook’s success than it did on Palm’s?
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