A blog about cutting edge technology at its maximum pace.

Ritesh Warke On Tuesday, January 4, 2011

Social networking behemoth Facebook has raised $500 million from Goldman Sachs anda Russian investment firm in a deal that values the company at$50 billion, The New York Times reported. Goldman invested $450 million and Digital Sky Technologies invested $50 million, the newspaper reported Sunday in its online edition, citing people involved in the transaction that it did not name. Goldman has the right to sell part of its stake,up to $75 million, to the Russianfirm. The report said representatives for Facebook, Goldman and Digital Sky Technologies declined to comment. The U.S. Securities and ExchangeCommission is reportedly looking into the booming trade in privately held shares of popular social networking sites. A big reason the SEC may be curious about the trading of these popular private startups' shares is because once a company hits 500 shareholders, it must disclose certain financialinformation to the public, even if it hasn't filed for an initial public offering. The Times reported that Goldman is planning to create a"special purpose vehicle" that may be able to circumvent the 500 shareholder rule because it would be managed by Goldman and considered just one investor, even though it could conceivably be pooling investments from thousands of clients. Shares of privately held companies can be traded on private stock exchanges such as SecondMarket, based in New York, and SharesPost, based in San Bruno, California. The sharesare generally sold by former employees or early investors in these companies. Only institutional investors or high net-worth individuals - those worth more than $1 million - can buy the shares.
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