LinkedIn Corp.'s fourth venture round
of $53 million vastly increases the business networking company's
resources as it continues expansion of a 23 million-strong user base,
and, more importantly, improves its ability to introduce new revenue
models.
LinkedIn had raised just $27 million prior to the current round from
Sequoia Capital, Greylock Partners and Bessemer Venture Partners, so
the new capital provides a hefty war chest for a company that is
already generating positive cash flow. Perhaps more important, however,
is the strategic value Bain Capital Ventures brings to the table as
lead investor in the new round.
Bain Capital is no longer tied in any formal way to Bain & Co.,
but the firm got its start as an offshoot of the giant consulting firm
in 1984, and most of its partners have roots in consulting. Bain
Capital typically touts its strategic value in its venture deals, which
tend toward complex, consumer-facing industries, and the firm's own
description emphasizes its competitive advantage as being "grounded in
a people-intensive, rigorous investment approach."
The announcement of Bain's participation as an investor makes no
specific mention of the firm's involvement in strategic business
planning, but LinkedIn notes that in addition to monetizing its large
user base with advertising, premium service subscriptions, job listings
and corporate hiring services, it is planning to launch several new
lines of business, and Bain certainly could play a role in developing
those.
LinkedIn's profit status eliminates real urgency, but doesn't
necessarilly mean much in relation to the $1 billion-plus valuation the
company's CEO asserts in his blog. After all, as commentator Bernard Lunn pointed out in a recent ReadWriteWeb post,
its European counterpart Xing had less deep-pocketed beginnings and got
to profitability within a few months. The big question is the extent to
which LinkedIn can convert free users (the vast majority) to paying
users, and its ability to monetize, through advertising and other
means, its user base to outside buyers. - Clifford Carlsen
See June 18 press release from LinkedIn Corp.
See March 15 ReadWriteWeb post
For more, see The Guardian, Associated Press and GigaOm
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