Facebook Worth $3.7 Billion According To Appraisal Company

Posted Feb 12, 2009

When the founders of ConnectU decided to sue Facebook, it was around the same time that the company was given a $15 billion valuation based on Microsoft’s $240 million investment in the social network.  Today Facebook has denied that they are worth anything close to that $15 billion according to court documents.  An appraisal company pegged Facebook to be worth $3.7 billion.

When Microsoft invested $240 million into Facebook in exchange for 1.6% equity, the company believed that Facebook’s stock was worth $35.90 per share.  This figure was used when ConnectU sued Facebook.  Facebook lawyers believe that the settlement with ConnectU should not be based on an comparison with Microsoft’s investment because the software giant bought Series D preferred stock.  The Microsoft investment also was a premium because they were interested in deeper ties such as becoming an advertising and search technology partner.

Yesterday it was revealed that ConnectU received about $65 million as part of the settlement according to a statement made by the former law firm representing them.  Cameron Winklevoss, Tyler Winklevoss, Divya Narendra created ConnectU at Harvard University before Facebook was created.  Facebook cofounder Mark Zuckerberg was hired by the three ConnectU founders as a developer.  Zuckerberg allegedly took the code from ConnectU and manipulated it to create Facebook.

However court documents revealed that ConnectU was payed $20 million in cash and 1,253,326 shares of common stock in Facebook worth about $45 million, based on Microsoft’s valuation.  That $45 million in stock is worth $11 million based on Facebook’s own appraisal.