Tag Archives: social networking site

Facebook raised $100M more, total is now at $493M

Facebook keeps on growing so does its expenditures. The latest news from the company is that they have raised yet another $100M round of funding. The company says this time all the money will go for buying servers, lots of servers. BusinessWeek has estimated they are going to scale things up with 50,000 new servers on top of their 10,000 they are currently running on. Total amount of money raised by Facebook is now $493M (we did the math and it seems $438M in total, but other more reliable sources claim it is $493M) according to several sources. This time, however, the founding is not against equity, but is a venture lending deal with TriplePoint Capital, a Menlo Park, Calif. based company that specializes in lending money to startups. Facebook already claims 109M monthly unique visitors and many people say the site is at times very slow.

Venture lending peaked during the dot-com bubble of the late 1990s and early part of this decade, but is making a comeback as startups use debt to pay for computer servers, telecom gear, and software. “The last thing the entrepreneur wants to do is see those precious equity dollars flowing into equipment purchases,” says TriplePoint CEO Jim Labe. “It’s a very unproductive use of equity to plow it into fixed assets.”

Forrester Research’s Gillett estimates that Google is buying half a million servers each year, while Microsoft’s annual consumption is as much as 200,000 servers.

Executives at Facebook declined to say which vendors will provide the servers. But the social network is already a big customer of Rackable Systems, which said in a recent financial statement that it derived $11.5 million, or 17% of $68 million in first-quarter revenue, from Facebook. This puts the total server expenditures of Facebook at $46M per year. With the new round this amount will significantly increase.

Facebook is hugely popular social networking site, second only to MySpace in terms of users. Other popular social networking sites are Bebo and Friendster, the second one tried to acquire Facebook in 2004 for just $10M.

The latest comScore metrics, we have seen, revealed that Facebook is actually havingo ver 100M unique visitors per month.

Peter Thiel, cofounder of PayPal and managing partner of the Founders Fund was the first angel investor in the company. He invested $500,000 into Facebook in early 2004. Later Accel Partners poured $12.7 million more in funding, at a valuation in the $100 million range.

The next year [2006], Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as returning investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was in the $525 million range.

Facebook is reported to have turned deals down from Friendster, Yahoo, Viacom  and the mighty Google a few months ago when Zuckerberg has chosen Microsoft to partner with. Microsoft de-facto has invested $240 million into Facebook for just 1.6 percent of the company in October 2007. This put the company’s valuation at over $15 billion on just $150 million in annual revenues.

More

http://www.facebook.com/
http://www.tpcp.com/
http://www.rackable.com/
http://www.techcrunch.com/2008/05/10/facebook-raises-another-100-million/
http://www.businessweek.com/technology/content/may2008/tc2008059_855064.htm
http://mashable.com/2008/05/09/facebook-triplepoint-funding/
http://venturebeat.com/2008/05/09/facebook-borrows-100m-to-build-out-its-infrastructure/
http://gigaom.com/2008/05/11/the-rising-cost-of-facebook-infrastructure/
http://www.marketwatch.com/news/story/hong-kong-tycoon-li-raises/story.aspx?guid=%7BE4097AA2-9EA3-4773-9100-456E68EE1C9A%7D
http://www.allfacebook.com/2008/03/facebook-gets-another-40-million/
http://www.techcrunch.com/2008/03/27/hong-kong-billionaire-puts-another-40-million-into-facebook/
http://mashable.com/2008/03/27/facebook-hutchinson-investment/
http://web2innovations.com/money/2007/11/30/hong-kong-billionaire-li-ka-shing-invests-60m-in-facebook-funding-totals-33820m-to-date/
http://gigaom.com/2008/03/27/facebook-soon-to-appear-in-3g/
http://www.facebook.com/apps/application.php?id=2915120374&b
http://gigaom.com/2008/03/13/lets-justify-facebooks-300-per-user-valuation/
http://www.crunchbase.com/company/facebook
http://www.techcrunch.com/2007/11/30/another-60-million-for-facebook/
http://kara.allthingsd.com/20071130/facebook-nabs-60-million-investment-from-li-ka-shing/
http://www.hutchison-whampoa.com/eng/about/chairman/chairman.htm

Imeem confirms the acquisition of Snocap for reportedly less than $5M off more than $10M in venture capital taken by the company!

An acquisition that was announced in late February has today been confirmed. Imeem confirms the acquisition of Snocap. As we have then written Snocap has been in a long quest for a buyer (at least since Sept last year) and has gone through some massive layoffs, so it was clear the company had little to no options left but to sell off. Rumors have it that no other competitive buyers have ever shown up on the horizon and Imeem was the most logical buyer for Snocap.  Just like in February official terms were not disclosed, but some insiders have speculated the price tag has been less than $5M. What we do not understand is how a company with over $10M in venture capital money and quite solid technology has ended up selling itself under fire. Imeem is known to have been licensing the company’s digital fingerprinting technology to track how many times any particular song is streamed on its site so that it can allocate a portion of its advertising dollars to the major music labels.

Other rumors have it the total investment in Snocap is way over $10M with CSV II that is known to have made its first investment, leading a $15 million Series C round in Snocap, which happened in early 2006. Other technology bloggers have meanwhile speculated it has been a payday for Fanning (also the founder of Napster), but it is hard for us to believe in this knowing it’s pretty rare to see VC terms these days without some liquidation preferences that protect them against fire sales like this.

Imeem is being said it depends on Snocap’s digital fingerprinting technology for its entire business model, which has surely forced Imeem to buy the company. The Snocap technology matches the music to its database of 7 million songs, which then allows Imeem to allocate a portion of its advertising revenues to the music companies who own the copyrights to the songs.

After all being said for the two companies it still remains quite unclear for us why Snocap needed to sell. Pressured from investors or what? The lesson learned here for Imeem is that startups should not rely on other startups for the key technology that their business is built upon.

Snocap was founded in 2002 by Napster creator Shawn Fanning and Jordan MendelsonRon Conway is perhaps their angel investor. The company is known to have taken $10M million from Conway, Morgenthaler Ventures and WaldenVC. Just like Imeem’s deal with Universal Snocap has also signed a distribution deal with MySpace. In fact Imeem and Snocap have also partnered in the past where Imeem used Snocap’s digital fingerprinting technology to track how many times any particular song is streamed on its site so that it can allocate a portion of its advertising dollars to the major music labels.

More about Imeem

Imeem is an online community where artists, fans & friends can promote their content, share their tastes, and discover new blogs, photos, music and video. Here are some of the things you can do on imeem:

Discover
-Enjoy the latest videos, music, photos, or blogs posted on imeem.
-Stay up-to-date with your personal network of fans and friends with “What’s New” notifications.
-Get in-depth stats for all your content and track their popularity.

Interact
-Tag, comment, rate, and share any of your friends’ cool (or embarrassing) content.
-Create or join groups for your favorite band, event, topic, and more!
-Start discussions with other imeem users and make new friends.
 
Share
-Embed your media on other pages (such as your blog, Bebo, etc.).
-Recommend stuff to your friends or add it to your “Favorites” list.
-Easily add media to your Del.icio.us, WordPress, Blogger, or Typepad.

Imeem is hoping to make money from advertisers, a portion of which will be shared with its music partners. It has signed up Puma, Nike and Microsoft among others, though it does not disclose revenues.

This is Imeem’s second acquisition after they acquired Anywhere.FM in January. Imeem has raised two rounds of capital, although the size of the second round was not disclosed.

Imeem is based in San Francisco and takes its name from “meme” – a term coined to describe the ideas that communities, adopt, and express. Dalton Caldwell is the CEO of the company and the co-founded together with Jan Jannink. The company used to be in Palo Alto and is known to have launched in 2004. Known investors in the company are Morgenthaler (Series A founding) and Sequoia Capital, the venture capital fund that supported Google and YouTube.

It is interesting to know what Imeem’s total funding is considering the fact Snocap has raised $10M. Imeem’s first round was only for $750K. Imeem does not disclose revenues.

Some competitors and similar companies include Skreemr, Seeqpod, Deezer, Pandora, Lala, MOG, we7 and Wixi.

More

http://web2innovations.com/money/2008/03/01/snocap-has-been-acquired-by-imeem/
http://www.stanwichadvisors.com/docs/CSV%20Press%20Release.pdf
http://www.techcrunch.com/2008/02/17/who-bought-rupture/
http://www.techcrunch.com/2008/04/07/imeem-confirms-snocap-acquisition/
http://snocap.com/
http://Imeem.com
http://www.crunchbase.com/company/imeem
http://www.techcrunch.com/2008/02/13/imeem-acquires-snocap/
http://web2innovations.com/money/2007/12/10/exclusive-imeem-inks-a-deal-with-the-worlds-largest-record-company/
http://www.techcrunch.com/2006/09/02/myspace-gets-into-music-biz/
http://www.techcrunch.com/2007/06/20/imeem-now-officially-legitimate/

Li Ka-shing invests $40M more in Facebook; total funding is now $378M from $338M before

The Hong Kong billionaire Li Ka-shing has reveled in a recent conference call that he raised his stake in the social networking site Facebook with some $40M more. That amount comes on top of his previous commitment of $60M, which brings his total investment in the popular site to $100M. What is his actually equity position in the Facebook, however, remains mystery to date, but considering what Microsoft has bought for their $240M (1.6%) it might turn out that Li Ka-shing’s ownership is perhaps below 1%. For Microsoft it might be quite clear what is the driving force behind such pity deal (locking down some advertising inventory and keeping Facebook away from the rival Google), but what the benefits for the Honk Kong billionaire are is very unclear for us. May be everything comes down to a potential IPO, which as we understand is not going to happen any sooner than 2010, despite some recent rumors for a possible IPO in as early as 2009. We think there is no other viable exit for your investors than going public if you have already taken more than $300M funding money off little to no steady revenues. There was no word on today’s Facebook pre-money valuation.

Here is what Li, who is chairman of telecom company Hutchinson Whampoa, told reporters on his company’s conference call:

“Facebook is doing very well and we could have some synergy between the 3G services of Hutchison and Facebook, so the customers could use Facebook on mobile phones.”

The combination of the social network and 3G networks is seen by Stacey Higginbotham from GigaOm as the most logical reason why Li Ka-shing was so eager to increase his stake in Facebook. Facebook users can already access the site on their mobile phones through the Facebook mobile page

Well, this might be the answer of our question from above what are the benefits for the Li Ka-shing in the context of Microsoft’s deal with Facebook.
A little more Facebook history and facts.

Facebook is hugely popular social networking site, second only to MySpace in terms of users. Other popular social networking sites are Bebo and Friendster, the second one tried to acquire Facebook in 2004 for just $10M.

The latest comScore metrics, we have seen, revealed that Facebook is actually havingover 100M unique visitors per month.

Peter Thiel, cofounder of PayPal and managing partner of the Founders Fund was the first angel investor in the company. He invested $500,000 into Facebook in early 2004. Later Accel Partners poured $12.7 million more in funding, at a valuation in the $100 million range.

The next year [2006], Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as returning investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was in the $525 million range.

Facebook is reported to have turned deals down from Friendster, Yahoo, Viacom  and the mighty Google a few months ago when Zuckerberg has chosen Microsoft to partner with. Microsoft de-facto has invested $240 million into Facebook for just 1.6 percent of the company in October 2007. This put the company’s valuation at over $15 billion on just $150 million in annual revenues.

Mr. Li Ka-shing is the Chairman of Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited. Cheung Kong (Holdings) Limited is the flagship of the Cheung Kong Group which has business operations in 55 countries around the world and employs about 250,000 staff. In Hong Kong alone, the Group includes eight listed companies with a combined market capitalization of approximately HKD981 billion (31 October 2007). Hutchison Whampoa Limited is a Fortune Global 500 company.

It would be interesting to find out what’s the equity position Mr. Li Ka-shing has secured for his $60M considering what Microsoft has bought for their $240M. 

More

http://www.marketwatch.com/news/story/hong-kong-tycoon-li-raises/story.aspx?guid=%7BE4097AA2-9EA3-4773-9100-456E68EE1C9A%7D
http://www.allfacebook.com/2008/03/facebook-gets-another-40-million/
http://www.techcrunch.com/2008/03/27/hong-kong-billionaire-puts-another-40-million-into-facebook/
http://mashable.com/2008/03/27/facebook-hutchinson-investment/
http://web2innovations.com/money/2007/11/30/hong-kong-billionaire-li-ka-shing-invests-60m-in-facebook-funding-totals-33820m-to-date/
http://gigaom.com/2008/03/27/facebook-soon-to-appear-in-3g/
http://www.facebook.com/apps/application.php?id=2915120374&b
http://gigaom.com/2008/03/13/lets-justify-facebooks-300-per-user-valuation/
http://www.crunchbase.com/company/facebook
http://www.techcrunch.com/2007/11/30/another-60-million-for-facebook/
http://kara.allthingsd.com/20071130/facebook-nabs-60-million-investment-from-li-ka-shing/
http://www.hutchison-whampoa.com/eng/about/chairman/chairman.htm

Snocap has been acquired by Imeem

Snocap was known to be searching for a new home for quite some time and it seems they have shopped themselves successfully as Imeem has bought them last month. Snocap is digital music wholesaler and Imeem is music streaming site so the synergy seems quite logical here. Terms were not disclosed publicly.

Snocap was founded in 2002 by Napster creator Shawn Fanning and Jordan MendelsonRon Conway is perhaps their angel investor. The company is known to have taken $10M million from Conway, Morgenthaler Ventures and WaldenVC. Just like Imeem’s deal with Universal Snocap has also signed a distribution deal with MySpace. In fact Imeem and Snocap have also partnered in the past where Imeem used Snocap’s digital fingerprinting technology to track how many times any particular song is streamed on its site so that it can allocate a portion of its advertising dollars to the major music labels.

It seems Imeme was in desperate need from the Snocap’s technology while Snocap needed a new home, which surely helped the deal happen.
 
Snocap has gone through significant layoffs and was rapidly heading towards major failure. The company’s key person Shawn Fanning was also planning to leave the company and deal with his new creature Rupture.

More about Imeem

Imeem is an online community where artists, fans & friends can promote their content, share their tastes, and discover new blogs, photos, music and video. Here are some of the things you can do on imeem:

Discover
-Enjoy the latest videos, music, photos, or blogs posted on imeem.
-Stay up-to-date with your personal network of fans and friends with “What’s New” notifications.
-Get in-depth stats for all your content and track their popularity.

Interact
-Tag, comment, rate, and share any of your friends’ cool (or embarrassing) content.
-Create or join groups for your favorite band, event, topic, and more!
-Start discussions with other imeem users and make new friends.
 
Share
-Embed your media on other pages (such as your blog, Bebo, etc.).
-Recommend stuff to your friends or add it to your “Favorites” list.
-Easily add media to your Del.icio.us, WordPress, Blogger, or Typepad.

Imeem is hoping to make money from advertisers, a portion of which will be shared with its music partners. It has signed up Puma, Nike and Microsoft among others, though it does not disclose revenues.

This is Imeem’s second acquisition after they acquired Anywhere.FM in January. Imeem has raised two rounds of capital, although the size of the second round was not disclosed.

Imeem is based in San Francisco and takes its name from “meme” – a term coined to describe the ideas that communities, adopt, and express. Dalton Caldwell is the CEO of the company and the co-founded together with Jan Jannink. The company used to be in Palo Alto and is known to have launched in 2004. Known investors in the company are Morgenthaler (Series A founding) and Sequoia Capital, the venture capital fund that supported Google and YouTube.

It is interesting to know what Imeem’s total funding is considering the fact Snocap has raised $10M. Imeem’s first round was only for $750K. Imeem does not disclose revenues.

Some competitors and similar companies include Skreemr, Seeqpod, Deezer, Pandora, Lala, MOG, we7 and Wixi.

More

http://snocap.com/
http://Imeem.com
http://www.crunchbase.com/company/imeem
http://www.techcrunch.com/2008/02/13/imeem-acquires-snocap/
http://web2innovations.com/money/2007/12/10/exclusive-imeem-inks-a-deal-with-the-worlds-largest-record-company/
http://www.techcrunch.com/2006/09/02/myspace-gets-into-music-biz/
http://www.techcrunch.com/2007/06/20/imeem-now-officially-legitimate/

No IPO for Classmates.com

On November 27, 2007 we have reported that Classmates Media has just filed to go public at a valuation of $600 to $700 million. It then appeared that Classmates is trying to cash in on the social networking market craze.

Classmates Media Corp., which operates the online social networking site Classmates.com, (when the company started they did not call themselves social networking site) expects its planned initial public offering to total 12 million Class A shares and price between $10 and $12 each.

Today we learned they have canceled their IPO in US. If it did go through it could have been the first pureplay social networking IPO in the country. And probably Facebook could have gathered some vital market information on how far they could eventually go to with their planned IPO in 2008 or 2009. But as it seems things did not work out.

United Online (NSDQ: UNTD) has canceled the proposed IPO of its Classmates.com social networking unit. By citing the standard “market conditions,” the company now says that such a move wouldn’t be in the interest of stockholders. In other words, the interest wasn’t there. While there had been some excitement over a social networking pure-play IPO, Classmates.com, with its subscription-driven business model and earth-bound growth rates, couldn’t fully capture the buzz. United Online said it will take a $4.5-$5.5 million charge in Q4 associated with the aborted process.

There could potentially be countless reasons for that decision but certainly several of them are standing out:

  • IPO market is sort of cooling.
  • The filing anyway did not appear any serious from the get-go.
  • Classmates is far beyond the buzz level some other social networking sites are enjoying today.
  • They have tried but it seems nobody else was buying Classmate’s story.
  • The FTC investigation (The company’s auto-renewal system has come under investigation at the FTC, potentially causing churn to spike).
  • Hints of self-dealing.
  • User engagement is 95 percent lower than say on Facebook, suggesting that users see little value in the service they’re paying for. Classmates has little value for young users, since there’s no need for them to re-connect; they’re already connected through other sites.
  • Facebook is making major inroads into Classmates’ adult demographic.
  • Classmates is sort of Web 1.0 company.

Taking into consideration some of the above points it is no wonder the investors passed.

An interesting question was asked by Techcrunchers: How is United Online going to get back that $50 million it “loaned” to its subsidiary now?

A recent report from Cowen & Co. analyst Jim Friedland spells out exactly why United Online couldn’t cash in with Classmates. One line sums up his thesis: “We expect the Classmates.com subscriber base to peak in the first half of 2008, followed by a steady decline to zero by 2012.” Much of the report hones in on the fact that Classmates is no Facebook. The biggest difference is that Facebook is free and offers far more robust features.

While we do not take the Facebook reason for a valid point, since Facebook itself is most likely going to become paid in some parts at some point in the future, we think the problem with Classmates is more on the aspect of the fact it is generally declining business rather than rapidly growing with viable future as for example some of the newer social networking players, including but not limited to, MySapce, Facebook, Bebo and a countless number of market-niche specific social networking sites and community sites of new type and breed.

While we are not sure how profitable Classmates is the revenues for the full year of 2006 were $139 million and 2005 revenues were $85 million. 2007 is expected to bring in more than $140M.

Via

[ http://web2innovations.com/money/2007/11/27/classmates-prepares-for-an-ipo/ ]
[ http://www.techcrunch.com/2007/12/12/update-classmates-ipo-is-pulled/ ]
[ http://www.nytimes.com/paidcontent/PCORG_317818.html ]
[ http://www.techcrunch.com/2007/11/26/classmates-ipo-tries-to-cash-in-on-social-networking-craze/ ]
[ http://biz.yahoo.com/ap/071126/classmates_media_ipo.html ]
[ http://www.sec.gov/Archives/edgar/data/1409112/000104746907009507/a2179839zs-1a.htm ]

Exclusive: Imeem inks a deal with the world’s largest record company

In what is believed to be a big leap for the relatively small social networking site called Imeem they announced today a licensing agreement allowing its users to listen free to the music of Vivendi SA’s Universal Music Group.

Universal Music, the world’s largest record company, has opened a new chapter in the industry’s experiment with advertising-supported music by backing Imeem. Imeem now boasts deals with all four major record companies, including Sony BMG Music Entertainment, Warner Music Group and EMI Group, all of which have already inked deals with the social network.

It’s a sharp turnaround from earlier this year, when none of the majors were willing to sign on to imeem’s new ad-supported interactive service. In fact, Warner sued Imeem, arguing that by allowing its members to upload and share MP3s of Warner music, it was infringing on its copyrights.

After months of negotiations, the companies have concluded a deal in which Imeem will have full access to Universal’s catalogue, making it the first social networking site to reach licensing agreements with each of the four big record labels.

Imeem has received attention from music executives because it has quickly built an audience of 19 million monthly visitors, up from the 16 million they reported in May 2007.

Despite these claims and the deal itself, Imeem’s traffic seems to have fallen off since earlier this year, from a peak of 5 million visitors in April to 2.37 million in November according to Compete.com. Quantcast is showing even worse numbers – only 2.4 Million American visitors. The traffic curve there is permanently falling down over the past 6 months.

Imeem is an online community where artists, fans & friends can promote their content, share their tastes, and discover new blogs, photos, music and video. Here are some of the things you can do on imeem:

Discover
-Enjoy the latest videos, music, photos, or blogs posted on imeem.
-Stay up-to-date with your personal network of fans and friends with “What’s New” notifications.
-Get in-depth stats for all your content and track their popularity.

Interact
-Tag, comment, rate, and share any of your friends’ cool (or embarrassing) content.
-Create or join groups for your favorite band, event, topic, and more!
-Start discussions with other imeem users and make new friends.
 
Share
-Embed your media on other pages (such as your blog, Bebo, etc.).
-Recommend stuff to your friends or add it to your “Favorites” list.
-Easily add media to your Del.icio.us, WordPress, Blogger, or Typepad.

Imeem is hoping to make money from advertisers, a portion of which will be shared with its music partners. It has signed up Puma, Nike and Microsoft among others, though it does not disclose revenues.

As part of the deal, Universal is said to have received an upfront payment worth more than $20 million, as well as an equity stake in Imeem. Universal will also receive a small payment each time one of its songs is streamed on the site of Imeem. A person familiar with the discussions said that the pay out Universal is about to receive is an equivalent to a fraction of a cent in addition to receiving a share of advertising revenue associated with a given song, that is, ads running near where a song is accessed. Most licensing deals with services that combine free music with advertising tend to offer labels only a share of revenue.

Imeem isn’t the first ad-supported music service to gain the support of all four major labels. Universal, Sony BMG, Warner and EMI have also been making their music available to ad-supported music downloading service Ruckus. Ruckus had an early advantage over other services in securing the majors’ cooperation because it targeted colleges and universities, where illegal music downloading is a particularly serious problem and is basically not possible.

In a statement, Universal Chairman Doug Morris called Imeem “innovative,” and praised Imeem for “ensuring that our artists are fairly compensated for the use of their works.”

According to eMarketer, spending on advertising on social networks will rise from $900 million this year to more than $2.5 billion in 2011.

Imeem is based in San Francisco and takes its name from “meme” – a term coined to describe the ideas that communities, adopt, and express. Dalton Caldwell is the CEO of the company and the co-founded together with Jan Jannink. The company used to be in Palo Alto and is known to have launched in 2004. Known investors in the company are Morgenthaler (Series A founding) and Sequoia Capital, the venture capital fund that supported Google and YouTube.

Via

[ http://www.ft.com/cms/s/0/ff0a7e34-a6c3-11dc-b1f5-0000779fd2ac.html ]
[ http://online.wsj.com/article/SB119725218005518932.html?mod=googlenews_wsj ]
[ http://www.informationweek.com/news/showArticle.jhtml?articleID=204800459 ]
[ http://www.forbes.com/business/2007/12/10/imeem-universal-music-biz-media-cx_lh_1210bizimeem.html ]
[ http://www.news.com/8301-13577_3-9831163-36.html ]
[ http://www.emarketer.com/Article.aspx?id=1004896 ]
[ http://mashable.com/2007/12/10/imeem-universal/ ]
[ http://www.techcrunch.com/2007/12/09/imeem-pens-a-deal-with-universal-music-now-has-all-the-majors/ ]
[ http://www.quantcast.com/imeem.com ]
[ http://www.crunchbase.com/company/imeem ]
[ http://imeemblog.imeem.com/ ]
[ http://lifehacker.com/software/social-networking/not-just-another-social+networking-site-208719.php ]
[ http://www.demo.com/demonstrators/demo2005/54152.php ]
[ http://bits.blogs.nytimes.com/2007/10/29/imeem-pioneers-free-music-with-ads/ ]
[ http://www.morgenthaler.com/content/Ventures/Articles/Articles%20documents/imeem%20in%20venturewire.pdf ]
 

Classmates prepares for an IPO

Classmates Media has just filed to go public at a valuation of $600 to $700 million. Compared to Facebook’s $15 Billion valuation, which the company took as a private entity, it ranks the company more in the bottom level of the Internet sector rather than within the top 100. It appears that Classmates is trying to cash in on the social netwrking market craze.

Classmates Media Corp., which operates the online social networking site Classmates.com, (when the company started they did not call themselves social networking site) expects its planned initial public offering to total 12 million Class A shares and price between $10 and $12 each.

Based on the anticipated price range, Classmates would have a market capitalization of $600 million to $720 million. Assuming an offering price of $11 per share, the company expects to raise net proceeds of about $117.7 million after fees and expenses from the IPO. Mark Goldstone will be the CEO of Classmates Media, and he is personally getting 2.8 million options at the IPO price.

Here are some facts at a glance as taken from the Security Exchange Commission:

—Revenues the first nine months of 2007 weer $140 million. (Full-year 2006 revenues weer $139 million; 2005 revenues were $85 million).
—Net income the first nine months was $1.6 million. ($1.9 million loss in 2006; $8.2 million loss in 2005).
—50 million registered users as of September, 2007. Only 12.8 million of which are active and 3 million of which pay on average $3.33 a month to email and connect with old friends directly.
—Monthly churn of 4.6 percent

Classmates makes money primarily from subscriptions. It also relies on MyPoints, which is a loyalty program. The company also owns a French based social network, Trombi, and Sweden’s Stayfriends.

Goldman Sachs and JP Morgan Sercurities are serving as joint book-running managers for the IPO. Deutsche Bank Securities is also underwriting the offering. The underwriters have an option to buy up to 1.8 million shares from the company to cover any overallotments.

The company plans to list its shares on the Nasdaq Global Market under the symbol “CLAS”.

In an another story the FTC is investigating Classmates membership subscription auto-renewal policy, where it just keeps charging your credit card until you tell it to stop, reports Techcrunch’s Erick Schonfeld.

comScore’s October 2007 social networking numbers reveal Classmates had 14.4 million U.S. visitors, which represents a one percent year-over-year decline.

The company’s overview:

We operate leading online social networking and loyalty marketing services under our Classmates and MyPoints brands. Our leadership position is based on a number of factors, including the number of unique visitors to our Web sites, brand awareness and the number of registered members. Our success is driven by our expertise in growing and monetizing large online audiences in a cost-effective manner and enabling advertisers to reach relevant online consumers effectively. Revenues from our social networking services are derived from subscription and advertising fees, and revenues from our loyalty marketing services are derived from advertising fees.

On our social networking sites, we enable users to locate and interact with acquaintances from school, work and the military. Led by our flagship Classmates Web site, our social networking properties are comprised of a large and diverse group of users, with over 50 million registered accounts as of September 30, 2007. Social networking pay accounts at December 31, 2005 and 2006, and at September 30, 2007, were approximately 1.8 million, 2.2 million and 3.0 million, respectively. Using our interactive tools and features, our members have contributed to our social networking Web sites a substantial number of distinct, relevant pieces of content, such as names, school affiliations, profiles, biographies, interests and photos.

MyPoints, our online loyalty marketing service, provides advertisers with an effective means to reach a large online audience with targeted marketing campaigns, while also enabling consumers to earn points-based rewards by responding to email offers, completing online surveys, shopping online and engaging in other online activities. During the last year, we marketed the products and services of over 400 advertisers to our MyPoints members, including NetQuote, Inc., Office Depot, Inc., VistaPrint Limited and Waterfront Media, Inc. As of September 30, 2007, over 8.8 million members were registered with MyPoints, over 6.0 million of whom were registered to receive email marketing messages from us.

From all this it becomes clear for us that calling yourself a social networking site might be profitable these days.

[ via Techcrunch ]

[via Yahoo Biz ]

[ via SEC ]