Facebook Inc. is poised to go public next year in a move that can't come late enough for CEO Mark Zuckerberg. Apparently turned off by the complexities of running a public company, which include regulatory headaches, public responsibilities and short-term financial pressures, and given unprecedented access to capital and an active secondary market that provides liquidity and valuations, Facebook and some of its peers are staying private as long as possible. Even the traditional marketing advantage that comes with an initial public offering -- the cost of which has risen from about $1 million to about $5 million in the past decade or so -- doesn't hold much sway with companies such as Facebook and Twitter Inc., which have adroitly leveraged the Internet to become household names.

The deal that makes it possible for Palo Alto, Calif.-based Facebook to remain private this year, but will likely push it to go public next year, is the recent $500 million investment by Goldman, Sachs & Co. and Moscow-based Internet investor Digital Sky Technologies. The round values Facebook at $50 billion, nearly twice the $27 billion Google Inc. was worth when it went public in 2004, and brings total venture capital raised by the company to $1.3 billion.

The Goldman-DST stake in Facebook is tantamount to a "private IPO," says Albert Wenger, a partner at Union Square Ventures and a backer of Twitter and Zynga Inc.

Another deal that Wenger considers a private IPO is the $950 million round at a reported valuation of $4.75 billion for Chicago-based online coupon provider Groupon Inc. from Fidelity Investments, T. Rowe Price Group Inc., Morgan Stanley and others. That fundraising broke the record for largest VC round ever, previously held for 15 years by movie studio DreamWorks Animation SKG, according to Thomson Reuters.

"These deals are designed to provide significant liquidity for insiders -- especially early investors and employees -- provide a piggy bank for continued aggressive growth and establish a share price for use in acquisitions," says Wenger. "Those are all the things that companies traditionally got from an IPO."

While a public debut traditionally represented a rite of passage, that doesn't seem to be the case with Zuckerberg. "A lot of people who ... build startups or companies think that selling the company or going public is this endpoint," he said on "60 Minutes" recently. "It's like you win when you go public. And that's just not how I see it."

Zuckerberg, who famously (and controversially) hatched Facebook in his Harvard dorm in 2004, may have good reasons to hold off on an IPO. "Mark Zuckerberg hates the idea of going public," says David Kirkpatrick, author of "The Facebook Effect." "He feels he has a kind of control that he would risk losing." Kirkpatrick points out that Zuckerberg controls three of the company's five board seats. "He has no incentive to loosen that control."

Zuckerberg's job would be harder, says Kirkpatrick, "if he had that short-term-oriented Wall Street mindset second-guessing him all the time."

The 26-year-old CEO's wishes notwithstanding, Facebook's days as a private company appear to be numbered, in part because of a securities rule involving a limit on the number of shareholders a company can have without disclosing its financial details.

With its backing of Facebook, Goldman set up a $1.5 billion fund as a vehicle for clients to invest in. News of the fund prompted the Securities and Exchange Commission to step up its investigation of secondary-market sales of stock in private companies, including Facebook; Goldman then withdrew the deal from U.S. clients, saying that the publicity threatened to make it illegal under U.S. securities laws. Despite that, the private offering, which was oversubscribed, continues with non-U.S. investors.

Even before Goldman restructured the offering, sources had raised questions over whether pooled investment funds, such as Goldman's Facebook fund, are designed to circumvent a 1964 regulation requiring a company with 500 or more shareholders to disclose its financials. A company must do so 120 days after the end of the fiscal year in which the shareholder limit is exceeded.

In a memo hand-delivered to Goldman clients, Facebook reportedly said it expects to cross that shareholder threshold by the end of 2011 and signaled its intention to go public, or at least make its financials public, by April 2012.

That timetable is in sync with comments made previously by early Facebook investor Peter Thiel, who told Fox Business in September that the company wouldn't go public until 2012.

That schedule makes it unlikely Facebook will be the first U.S. social networking company to take the plunge. Two companies that may beat Facebook: Groupon and LinkedIn Corp.

In December, Groupon hired Jason Child, a long-term Amazon.com Inc. executive, as its first chief financial officer. That same month Groupon reportedly rejected a $6 billion offer from Google. Since raising its big round of capital in early January, Groupon reportedly has been meeting with bankers about a potential $15 billion IPO, which may come in the spring. As a Groupon investor, Morgan Stanley seems well positioned to underwrite the company's IPO.

Meantime, LinkedIn, which focuses on business professionals and is one of the older social networking sites, having been founded in 2003, is also looking at a 2011 IPO and has reportedly selected underwriters, with Morgan Stanley, Bank of America Corp. and J.P. Morgan Chase & Co. said to be among the bookrunners.

Unlike Zuckerberg, LinkedIn co-founder and chairman Reid Hoffman has openly indicated that an IPO is the preferred exit. "For us, first and foremost, it's about our mission, which is to connect the world's professionals," LinkedIn CEO Jeff Weiner told Bloomberg television in August. "An IPO, being public, raising money, that's really a tactic that helps us ultimately achieve that long-term objective."

Zynga is also considered a contender for the public markets, but, like its partner Facebook, the social game developer is apparently choosing patience. Zynga's primary business is making popular games for Facebook such as "FarmVille" and "Mafia Wars," but it plans to expand its offerings to other platforms before going public. Zynga has raised $519 million since its founding in 2007 and recently bought social browser developer Flock Inc. for undisclosed terms, the eighth acquisition in as many months for the San Francisco startup.

"By providing liquidity for early investors and employees, the need for an IPO tends to shift a bit," said DST founder and CEO Yuri Milner shortly after his firm led a $180 million investment in Zynga. "This liquidity event will help [Zynga CEO Mark Pincus] focus on business and execution, and that's what he was looking for."

The upshot of the slowed pace to IPO means that these Internet companies will be more mature when they go public than the ill-fated dot-coms of the '90s, such as Pets.com and Web-
van. "The Silicon Valley and Wall Street hype machine is back on, but the difference between now and 12 years ago is that companies like Groupon, Facebook, Twitter and Zynga have significant traffic and real revenues," says Steve Anderson, a veteran executive at Microsoft Corp., eBay Inc. and Starbucks Corp., and a partner at Kleiner Perkins Caufield & Byers before founding Baseline Ventures in 2006. His firm backs Twitter and dozens of Internet startups.

The details on Facebook reportedly revealed in Goldman's pitch memo back up Anderson's assessment. In the document, say sources who have seen it, Facebook boasts 600 million users and earned $200 million on $777 million in revenue in 2009 and $355 million on $1.2 billion in revenue the first nine months of 2010.

Is there a downside to delaying the debuts of Web 2.0 startups? Maybe not for the companies themselves, but perhaps for the public, says Union Square's Wenger. "Small investors now have no access to the most interesting investment opportunities," he says. "Instead, these companies are going to be more or less fully developed by the time they eventually come to the public markets, with most of the upside having been captured by private investors."

While a member of that private club
himself, Wenger finds the elitism disappointing, given the democratic promise of the Internet. "With the Internet," he says, "we should be seeing IPO 2.0 -- direct to small investors without the historic flip opportunity for well-connected investors."