Ning Raises $15 Million More at a–Yes, Really–$750 Million Valuation
by Kara Swisher
Posted on July 21, 2009 at 4:45 PM PT
In a quiet fund-raising effort, Ning has raised $15 million more, a round that is valuing the social networking start-up at an eye-popping $750 million valuation.
In its last fundraising $60 million round a little more than a year ago, Ning was valued at $500 million.
The money for this fifth Series E round comes from a Silicon Valley venture firm, Lightspeed Venture Partners.
The Palo Alto, Calif.-based Ning, founded by well-known entrepreneur and Ning Chairman Marc Andreessen and CEO Gina Bianchini, confirmed the funding when contacted by BoomTown. It was not actively searching for funding.
Other investors in Ning include LinkedIn Chairman Reid Hoffman, Legg Mason, and Allen & Co.
The additional funds raised bring the total garnered by Ning to $119 million.
Ning is a platform aimed at offering customizable tools that let users create their social networks about their interests, such as for fans of the movie “Twilight.”
Ning puts online ads on the sites, using Google (GOOG), and is also working on its own advertising platform. It also offers an array of other services and is planning more soon, such as a virtual-gift offering.
Founded in early 2007, it currently has 29.3 million registered users, who are using 1.3 million social networks, and it is adding one million registered users every 15 days, said the company.
But not all its social networks are active, and Ning’s monthly unique visitors are lower, according to various surveys, at about six million in the U.S.
Ning is one of Andreessen’s angel investments, although he recently raised $300 million for a new venture fund he is running with longtime investing partner Ben Horowitz.
In an interview, Bianchini said the goal was to become an even bigger platform for building social networks and the money would be used for possible acquisitions and other strategic options, attracting more talent and also to offer its social networks more tools to be discovered.
“It’s clear to me when you look the market…there needs to be a place for people to express their interests and passions,” said Bianchini, who noted Facebook and Ning do not necessarily overlap. “We want to be the social network for interests and passions online.”
Lightspeed’s Ravi Mhatre, who led the investment for the venture firm, said it was due to a lot of reasons, although he noted that the effort was not a traditional fund-raising effort, but more of an interest by Ning in adding a top VC to its investor pool and by Lightspeed in Ning’s hyper-growth.
“The growth at Ning has been massive in the last year and, combined with the quality of the team and seeing that kind of momentum, it worked out well for us both,” said Mhatre.
Comments
This is just crazy. Ning is a money pit. Does Lightspeed really think that Ning will sell for more than a billion? Based on what?
Posted by Arthur Howe at July 21st, 2009 at 5:56 pmA:
Hey, not my money! See new quote from them!
Posted by Kara Swisher at July 21st, 2009 at 6:00 pmCongrats, Ning. Like Arthur mentioned, I think Ning’s platform is great, it’s just a matter of how they’ll make money. If you look at their Compete stats, since March, their page views has been going down at a steady rate, and I think a major part of that is their content restrictions (porn, etc).
Posted by Daniel Brusilovsky at July 21st, 2009 at 7:37 pmLSVP is so screwed up. They’ve invested in total dogs and Ning is a complete dog.
Posted by Dave Esmo at July 21st, 2009 at 9:09 pmAll this shows that Andreesen is the master at pumping up valuations on poorly performing assets.
Even if you believe that the 200,000 private social networks are active, how many are actually willing to shell out for premium service? I would venture a guess of 1-5%. Even if we assume 10% that is 20,000 willing customers at $25 pop (this price is from their blog), that is 500K per month. Let’s not forget that they also make money selling ads. Assuming they can make $.20 per user* on 6 million users, they would take in another 1.2M /month, for a total of 1.7K/ month or approximately $20 M per year.
As for expenses, I am not privy to their numbers but I can guess that between employees and servers, they are probably losing money at least as much as the revenue stream.
So to recap the math, $750M for a company that makes $20M a year (using generous assumptions) with little prospects of turning a profit. Do I hear “Bubble 2.0” popping?
*Raj Kapoor (Managing Director at Sillicon Valley’s Mayfield Fund) estimates that that the big social network sites make $.20 month per user on ad sales (source: http://www.undertheradarblog.c.....e-vs-on/).
Posted by David Dines at July 22nd, 2009 at 7:10 pm