Hate to stay on the Facebook subject, and I promise I will not return to it for some time (say, until Facebook is profitable....) but just saw this short interview with Fred Wilson in Business Week (here) and caught him saying he thinks acquisition price for Facebook just now is at around $5-7 Billion. Now if that is the acquisition price, the private round investment should be at much lower valuation...but Microsoft is not really a rational player, I guess. I still think even Fred is over the top, but I guess I he is factoring in all the momentary hype value.
We are going through a round right now for one of our portfolio companies, which we believe is a path breaking company in an area where real money is being made right now. There is no hype value, because the company is not consumer facing--which means it actually has to build a real business case before it will have major jumps in value. Thank goodness for us and our investors, we will get a nice bump up in value terms from when invested (little over a year ago)--but nothing like what Facebook investors have seen. But we are still thrilled with our success, and happy for them!
Valuations are a dark art,and acquisition prices of pre-profit companies even more so.
So ask yourself, would you buy Facebook right now for $7 Billion (assuming you had the cash to spare...)??