Reid Hoffman, one the most successful and high profile technology investors who stakes in several other huge web companies, such as social games company Zynga, daily deals site Groupon and location service Gowalla, the Facebook founder will opt to go public in the first half of 2012.
“I suspect that Mark will choose to go public because the company has to put in a lot of financial work in order to make the necessary filings and so he might as well make sure he benefits employees and ultimately the company from the level of work that’s already involved,” he said.
“Going public would benefit Facebook in lots of ways – namely having public currency to do acquisitions. So Mark might as well get the benefit as well as the cost. Given that logic – I would suspect that some time in first half of next year, he will engage in the IPO process,” Hoffman added.
The networking web site is being under pressure from the US stock market regulator, the Securities and Exchange Commission (SEC). It has to disclose a number of its private shareholders on the secondary market. The limit for a private company is 500.
The social network site has to make the necessary filings or IPO. The deadline is in April 2012.
Some experts predict that Facebook can set its valuation at $100bn when it floats and break new ground as the biggest consumer technology public offering ever.
“It could be the largest ever consumer technology IPO,” said Hoffman. “Facebook has deferred for a long time. The pattern 10 years ago was to go out [float] as soon as you could. The pattern now is to build a lot of inertia in your business and Facebook has done that. This will lead to a high tension IPO with a robust valuation.”
Recent valuations of some consumer web sites have caused talks that there is a new “technology bubble” waiting to burst.
Being a partner at leading Silicon Valley firm Greylock Partners, Hoffman has refused to comment wheter the industry was back in a bubble. “I leave answering that specific question to other people. The precise point of a public market is that the market dictates the current answer to that question. Right now people who claim the technology market is back in a bubble are those who believe investors are underwriting the risk relative to growth.”
“I invest in, and will continue to do so, in networks, platforms and marketplaces. The current ones will deepen and new ones will add value -so I am bullish about the growth opportunities in the market right now,” he added.
He also predicted that secondary private markets could grow up around companies similar to Facebook would have to “morph” and change in response to concerns from US regulators.
“The secondary market is a complicating factor in all of these businesses,” he said. “My guess is that how the secondary markets work today is not how they will work in a couple of years. How they will work is to be determined.”
“The challenging thing about them is that private companies usually like to control their shareholders and as these markets have grown to be so big, almost seeming like a quasi real public market, it is more difficult to keep a handle on. Plus there are increasing regulatory issues.”
Hoffman has spent several weeks in UK as part of an initiative he had set up with fellow investor, Sherry Coutu, called ‘Silicon Valley comes to the UK’. [Via The Telegraph]