Persuading institutional investors to buy into a company still sorting out a mobile strategy has been harder than it seems.
Besides the 13 lucky engineers working at Instagram, another group lucked out when Mark Zuckerberg decided it would be a good idea to plunk down $1 billion to buy the company: the bankers charged with drumming up interest in Facebook's (presumably monster) IPO.
While the SEC has yet to bless Facebook's S-1, its lead bankers at Morgan Stanley are apparently already out there selling the story to big institutional investors to fill out what's known as the "order book" -- a commitment by mutual funds and other biggies to buy a certain number of shares.
Pitching Facebook's story -- 845 million users, $3.7 billion in revenue -- would seem like an easy job for the bankers. Not so fast. The story's one big hole: A largely nonexistent mobile strategy. In fact, the mobile problem is one that Facebook highlights in the risk section of its S-1, saying, in effect, that Facebook has 425 million active mobile users and growing and that, still, the company has no way to make money off them.
Now comes Instagram, a startup phenom that has picked up more than 30 million users in less than 18 months of existence. While Zuckerberg reportedly orchestrated the Instagram purchase almost entirely on his own -- surprising even the company's board members, according to the Wall Street Journal -- Facebook's bankers are now working the benefit of the acquisition of the photo-sharing app their into their talking points about the IPO.
This tidbit comes from George Zachary, a venture capitalist at Charles Rivers Ventures. Zachary was the lead investor in Millennial Media, a mobile ad network whose explosive IPO last month was underwritten by the same bankers at Morgan Stanley who are handling the Facebook deal. Zachary talks with the Morgan crew regularly, both about Millennial and other deals that Morgan is trying to win.
Besides the 13 lucky engineers working at Instagram, another group lucked out when Mark Zuckerberg decided it would be a good idea to plunk down $1 billion to buy the company: the bankers charged with drumming up interest in Facebook's (presumably monster) IPO.
While the SEC has yet to bless Facebook's S-1, its lead bankers at Morgan Stanley are apparently already out there selling the story to big institutional investors to fill out what's known as the "order book" -- a commitment by mutual funds and other biggies to buy a certain number of shares.
Pitching Facebook's story -- 845 million users, $3.7 billion in revenue -- would seem like an easy job for the bankers. Not so fast. The story's one big hole: A largely nonexistent mobile strategy. In fact, the mobile problem is one that Facebook highlights in the risk section of its S-1, saying, in effect, that Facebook has 425 million active mobile users and growing and that, still, the company has no way to make money off them.
Now comes Instagram, a startup phenom that has picked up more than 30 million users in less than 18 months of existence. While Zuckerberg reportedly orchestrated the Instagram purchase almost entirely on his own -- surprising even the company's board members, according to the Wall Street Journal -- Facebook's bankers are now working the benefit of the acquisition of the photo-sharing app their into their talking points about the IPO.
This tidbit comes from George Zachary, a venture capitalist at Charles Rivers Ventures. Zachary was the lead investor in Millennial Media, a mobile ad network whose explosive IPO last month was underwritten by the same bankers at Morgan Stanley who are handling the Facebook deal. Zachary talks with the Morgan crew regularly, both about Millennial and other deals that Morgan is trying to win.
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