2007 marked a euphoric climate for valuations and fundings in the digital space.
- Facebook kicked off the festivities with a $240M investment on a $15B valuation [our coverage].
- Slide finished off 2007 with an insane $50M investment on a $500M pre-money valuation [our coverage].
When Google tumbled from $747 to $430, I presumed that valuations for digital assets would follow suit (not that they should, but valuations are tricky, it’s a function of demand and supply for a given deal, admittedly, but the landscape and climate affects it, too).
But, they haven’t. It’s also not like we are seeing a flight to quality.
Yes, Federated Media has great sites and authors in its roster, but it’s a company with abysmal margins, paying out 50% off the top to partner sites. Federated Media is looking at raising $30M on a $200M valuation. This after supposedly turning down a $100M buyout offer. Is Federated Media worth $100M?
Then Meebo comes out raising $25-30M at a $200-250M valuation, too. Meebo streamlines IM, I see the value, granted… but would a company really pay $500M to acquire it? Maybe. Don’t know.
Then today, Slide competitor RockYou hints at raising money at a $400M range, as well. We know about the challenges and obstacles to monetizing social media… and even those who fueled the social media boom are unsure of the merits today.
I know that digital provides a sanctuary in a slowing economy… but I am nonetheless surprised at some of the torrid valuations these days.
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