Facebook’s imminent stock sale risks putting stock markets to shame. Investors will clamour for a piece of the social network. But, unlike Google’s 2004 IPO, everyone who’s anyone has already made a killing off Zuckerberg’s dorm-room project. At a $100-billion valuation, it’s hard to imagine much could remain.
The list of who gained access to Facebook’s value-creation is extensive. It’s not just the Silicon Valley elite, including Sean Parker, Peter Thiel and Zynga’s Mark Pincus. The roster extends to global billionaires and Goldman Sachs. Even Microsoft is up big.
In one respect, that’s good. It suggests innovative entrepreneurs can access capital from diverse sources. And, that may mean fewer like Pets.com tap investors. But, when the question of equality of opportunity in capitalism is being questioned, Facebook shows one clear way the rich get richer.
Set aside the earliest funders. Thiel, who invested the year Google went public, gambled on a Harvard dropout with an idea. Accel Partners could have seen its $12.7 million investment in 2005 vanish, rather than rise to $9 billion.
Later, investors also took risks, though their procession looks more like the Davos caste system. At $15 billion, there were Microsoft and Hong Kong billionaire Li Ka-shing. Soon after, Russian internet smarty-pants Yuri Milner offered to buy stock from Facebook staff. Bono’s Elevation Partners swooped in with a deal that might just allow it to raise another fund.
Later came Goldman, buying $2 billion of Facebook stock for private banking clients and itself at a $50-billion valuation. Facebook staff shares were available on SecondMarket, but only to accredited investors with experience in private firms.
The worry is that after the investing aristocracy has feasted on Facebook, there’s little left for the hoi polloi. Google’s lifespan as a private firm was shorter before debuting at $85 a share. They’re now $580 — a valuation approaching $200 billion. For Facebook to match that, it would need to become the world’s first $700-billion company.