We’ve been digging deeper on the Elevation Partners investment in Facebook Common Stock. In our original post we had heard that Elevation Partners paid “around $30/share” for the stock in a late 2009 transaction. A new source with direct knowledge of the deal (a limited partner in the fund) now says the price was more like $20/share. That valued Facebook at just under $9 billion, and Elevation Partners took around 1% of the company in the transaction.
Private sales occurring on SecondMarket at about the same time were closing at higher prices, in the $25/share range.
As we wrote in the first post, Elevation Partners is clearly counting on this investment to offset losses on investments in Palm and Forbes, and save the fund:
The fund secretly bought up some $90 million of Facebook shares on the secondary market late last year. One person with knowledge of the transaction told us: This deal – which anyone with $90 million could have struck – could be the only thing that tips the fund in the black, a crucial bragging point as Elevation gets ready to think about raising its second fund in a brutal fundraising environment.
The new pricing info, though, is better news for Elevation Partners. DST paid a $10 billion valuation for Facebook in May 2009, albeit for Preferred Stock with additional rights over the Common Stock that Elevation Partners now owns. And DST has also dollar cost averaged their price per share down with additional Common Stock purchases at a $6.5 billion valuation.
In a couple of years this will likely look like a very smart, albeit somewhat odd, investment by Elevation. Odd because venture capitalists rarely buy common stock in startups at market prices. Smart because they’re likely to make a very good return on the investment anyway. And who knows, if some of their other unannounced deals are winners, too, the fund can get some of its shine back.
Facebook is the world’s largest social network, with over 1 billion monthly active users. Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskovitz, Chris Hughes, and Eduardo Saverin to help build Facebook, and within four months, Facebook added 30 more college networks. The original...
Elevation Partners is a newly formed private equity firm that makes large-scale investments in market-leading media, entertainment, and consumer-related businesses. Elevation focuses on investing in intellectual property and content oriented businesses, as well as traditional media and entertainment companies, Elevation hopes to help media and entertainment businesses create and market great content and insure it reaches the widest audience possible.