After we saw some rumors about this over the weekend, Facebook today confirmed that it will receive a $200 million investment from Digital Sky Technologies (DST), one of the leading Internet investment groups in Eastern Europe. This investment puts Facebook’s valuation at $10 billion. DST also plans to offer to purchase at least $100 million in Facebook common stock from existing shareholders.
According to Facebook‘s CEO, Mark Zuckerberg, roughly 70% of the company’s users are now outside of the U.S., so cooperating with an international investment firm seemed to make sense in order to bring a global perspective to Facebook’s operations. DST will not get a seat on Facebook’s board, however.
Note: Facebook will hold a press conference at 9:45am Pacific and we will update this post with more information as it becomes available.
Update from press conference:
While the press conference did not feature any really exciting revelations, Zuckerberg stressed that Facebook is doing well financially. The company does not have any immediate plans for the cash it will receive from DST. Zuckerberg was also asked about a possible IPO, but according to Facebook’s CEO, an IPO is not on the “immediate horizon.”
Being asked about Microsoft’s investment in Facebook at a $15 billion valuation, Zuckerberg mostly sidestepped the issue, but stressed that this investment was part of a larger partnership at the top of the bubble and that he thinks that $10 billion valuation is “fair” and that he “feels good” about it.
Zuckerberg expects that Facebook’s revenue will continue to grow about 70% year over year and that the company will be cash-flow positive in 2010.
While the companies did not directly confirm a relationship between the common stock deal and cashing out options from Facebook’s employees, Zuckerberg mentioned that Facebook would have more to announce about this in the future and it was quite clear that Facebook and DST talked about this.
Given the nature of the call, there was not a lot of focus on specific features, but Zuckerberg did confirm that Facebook is testing out a video chat feature. Our friends at All Facebook spotted references to this in Facebook’s code two weeks ago.
Original post follows:
Digital Sky Technologies is a major player in Eastern Europe, and with Mail.ru, Forticom, and vKontakte among its assets, the company claims to account for over 70 percent of all all page views on the Russian-speaking Internet. Interestingly, DST (mostly through its investment in Forticom) also owns interests in a number of social networks like one.lt and Odnoklassniki.ru.
This deal also fits in well with other rumors about Facebook trying to raise capital to allow its employees to cash out some of their options. Just two weeks ago, our colleagues at VentureBeat reported that Facebook’s current investors “found it a stretch to supply the full amount of capital” that would be needed to provide Facebook with enough money to allow it to buy out roughly 15 million common shares at around $10 each.
While we knew that Facebook had built up an impressive international following, this is the first time that we have heard Zuckerberg mention that 70% of the service’s users now come from outside of the U.S. If this is indeed true, then this is quite a remarkable achievement for a company that used to struggle to grow outside of the U.S. market. We can only assume that the rapid growth of Facebook in the U.K. and Canada has helped the service to achieve these numbers.