Facebook has said publicly that it is in talks with potential investors all the time, but the amount of interest in the term sheets Facebook’s board is seeing these days is so high that Fred Wilson of Union Square Ventures calls the company “public without being public.”
This morning, two rumors circulated that Facebook was recently offered term sheets at $2 billion (TechCrunch) and $4 billion (VentureBeat). We don’t know whether or not these rumors are accurate, but it’s quite likely that Facebook is continuing to talk with investors (and creditors).
There is still rampant skepticism about Facebook’s financials despite the company’s increasing openness (/leakiness) about its business. Facebook COO Sheryl Sandberg told BusinessWeek in an interview last week that the company was “profitable [and] on a clear path to being cash-flow positive,” and in a letter to company employees a couple of weeks ago that was leaked to Kara Swisher (when former CFO Gideon Yu left the company), CEO Mark Zuckerberg said the company expects revenue growth of 70% in 2009 from a reported $280 million in 2008:
Based on our first quarter results, we now believe we are on track to see our revenue grow by at least 70% this year. We just completed our fifth straight quarter of EBITDA profitability. And most importantly, we expect to achieve free cash flow profitability next year.
However, Facebook has not officially announced any details on its internal valuation since Microsoft’s $240 million strategic investment in 2007 that valued the company at a whopping $15 billion.
Wilson, a well-connected venture capitalist, says that $4 billion is in the “ballpark” now, and that the secondary market in Facebook’s shares is active between $4-$5 billion ($9-$11/share).
“I suspect that Facebook is seriously considering doing what Google did and biting the bullet and going public… at this point, there isn’t much cost (other than finacial costs of being public) that Facebook isn’t already paying,” he says.