Remember when Facebook was a social networking site mostly for the world’s youth? Now, Facebook is the talk of every investment banker and Wall Street investor not just because it represents what many feel is the biggest investment opportunity of the modern age but because it has opened the door for sites like Groupon, Pandora, Twitter, and the many up and coming startups to fetch valuations equal to some of the largest companies in the world.
Just this week, Groupon, the two year old tech startup that presents deals, called groupons, separated by major cities, to its subscribers, was visited at its Chicago headquarters by Goldman Sachs CEO Lloyd Blankfein who was trying to convince Groupon execs to pick Goldman for their Initial Public Offering (IPO) which is said to be worth $1 to $1.5 Billion according to CNBC.
Not only is Goldman Sachs interested, so is Morgan Stanley, Bank of America, and the other Wall Street banking giants. The IPO was only fast tracked after Groupon rejected Google’s $6 Billion takeover bid by Google.
Only two years ago CEO Andrew Mason started a small company funded with $1 million from a former employer. If this IPO goes ahead, it will rank as one of the nation’s largest tech IPOs according to Thompson Reuters. (Until the Facebook IPO takes place.)
Groupon isn’t the only company with a recent mega valuation. Internet radio giant Pandora just passed 75 million users and is planning to offer a $100 million IPO in the near future. According to reports, they recently met with the large Wall Street banks in order to select who will handle the offering.
Other companies like Twitter are said to be considering an IPO as well as many other rapidly growing tech startups. Why now? Industry insiders had been waiting for somebody to make a move that would give Facebook a more concrete valuation and that came after two events but the second one was the most important.
Goldman Sachs recently made a $500 million investment in to Facebook and according to analysts who calculate the value of private companies who sometimes trade shares of stock in a market known as the shadow market, Goldman’s $500 million investment makes Facebook’s total value about $56 billion!
Because of this mega valuation, investors looked at other companies like Groupon and Pandora and compared their known metrics to those of Facebook and came up with valuations that made an IPO a reality for these tech startups.
What does all of this mean for the small business owner right now? Great ideas can grow fast and while a billion dollar initial public offering may not be in your future, your great idea could net you big profits. Working hard to make your business idea a reality can and does pay off. Even a fraction of the success of one of these tech startups could mean a comfortable standard of living for you and your family.