Venture Capitalists Continue to Invest in Social Media Companies

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There is clear interest from venture capitalists in social media companies.

Venture capitalists’ funding of social media companies increased to $819 million in the fourth quarter of 2010, according to a report from Business Insider.

In fact, the fourth quarter total was almost as large as the $856 million that was raised by social media in first nine months of 2010.

Funding for social media companies – during all of 2010 – totaled $1.67 billion, according to the report.

In addition, Second Shares reported that Facebook saw its membership grow in the United States among those aged 18 and above.

The increase for U.S. members, who are 18 and above, worked out to a 22 percent compound annual growth rate (CAGR) over the past two months, according to a Jan. 10, 2011 report.

In addition, the percentage of Facebook members, who are visiting the site daily, worked out to a CAGR of 11 percent.

Similarly, LinkedIn also saw increases in membership. Growth was up 12.3 percent for LinkedIn and the number of people visiting the site multiple times a month increased 42 percent.

There was also a statistically insignificant drop in Twitter membership.

In a related matter, TechZone360 reported recently that Facebook may be considering having an initial public offering. The company was recently valued at $50 billion.

In the meantime, investment bank Goldman Sachs is leading a new round of investment in Facebook with a $450 million, according to recent media reports. In addition, $50 million was raised from Digital Sky Technologies.

Goldman Sachs has also set up a "special purpose vehicle" to allow its clients to invest in Facebook, according to TechZone360. Goldman Sachs may reportedly get as much as $1.5 billion from investors eager to own part of Facebook, says TechZone360.


Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Janice McDuffee
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