Hot Deals, Big Money: What’s Up With Silicon Valley? It’s hard to go even a few blocks in New York these days without hearing about Foursquare, the location-based social network.
With more than 600,000 subscribers and endless media attention, the startup is now being actively wooed by four major venture capital investors, which are valuing it at between $50 million and $70 million. Who will get to invest? Only time will tell. But Foursquare isn’t the only startup seeking a “big round” at a “big valuation.” Back in Silicon Valley, one of the hottest deals under way right now is Quora, the Palo Alto, Calif. Valley’s Meh! Meh!
From the way I see it (and I am a contrarian), we are in the meh phase of the technology cycle. On the web today, Twitter and Facebook are solidifying their positions of dominance. The new reality of the social web (and the Internet) is that both Facebook and (to some extent) Twitter are dominating our online attention, siphoning minutes away from other services. What’s Hot? Ride the Momentum. Is Quora Worth $86 Million? Or $100 Million? Last week, I reported that Quora, a Palo Alto, Calif.
-based company started by former Facebook employees such as Adam D’Angelo and Charlie Cheever, was looking to raise money that would eventually give it a valuation of around $100 million. Today there are reports that the company raised about $11 million at a valuation of $86 million. Quora, a massive user-created question-and-answer site that may one day compete with Yahoo Answers and Wikipedia, itself confirmed the funding in an ambiguous-sounding press release but never got around to giving details.
The new funding has come from Benchmark Capital with former Facebook employee Matt Cohler joining the board. So why is the company getting this super valuation? The Magic Wands As I explained last week in my post, Hot Deals, Big Money: What’s Up With Silicon Valley? Secondly, there is a premium these days on startups created by former Facebook stars. Now don’t get me wrong — Quora is full of smart engineers and great product guys. Four VC Firms Battle For Foursquare, Valuation Goes Stratospheri. What do Accel Partners, Andreessen Horowitz, Khosla Ventures and Redpoint Ventures have in common?
Besides being tier one venture capitalists, at least one thing: They are all fighting furiously to be the lead investor in Foursquare’s next venture round. All that competition is driving the valuation massively upwards, too. A couple of weeks ago we’d heard that the deal would likely be closed at around a $50 million valuation.
Today we’ve confirmed that the final price will likely be $60 million – $70 million. They’re raising around $10 million, which means when it’s all over Foursquare will be worth up to $80 million on paper. The front runner in the deal is Gideon Yu from Khosla, we’ve heard from multiple sources. What a choice, though. More Details About Spotify’s New Money. Spotify, one of my favorite new companies, is getting more money.
Earlier today, Michael Arrington reported that he had heard from multiple sources that the Founders Fund has invested in the fast-growing European startup. “We do not know the size of the investment; however, we believe it may have been a token amount to get [Founders Fund Managing Partner Sean] Parker’s involvement in the company,” Arrington wrote.
While my sources are confirming those rumors, they point out that the amount of money from the Founders Fund, contrary to Michael’s report, is actually substantial. It is said to be as much as multiple millions of dollars. Spotify wasn’t actively looking for funding and this new investment is being described as opportunistic. With this rumored investment, Spotify now shares two major backers with Facebook – The Founders Fund and Chinese telecom mogul Li Ka-Shing. Photo of Martin Lorentzon and Daniel Ek, co-founders, courtesy of Spotify. Pandora Raises Funding From GGV Capital and Allen & Co.