According to a report from The Wall Street Journal, the JPMorgan Chase & Co. has put together a $1.2 billion ‘digital growth fund’ designed for investments into late-stage technology startups like Facebook and Twitter. The announcement comes soon after a previous WSJ report which spoke about the financial major’s plan to raise funds in the tune of half a billion dollars for investments into digital media companies.JP Morgan’s move assumes even more significance when seen in context. Just last month, Goldman Sachs made a private investment of about $1 billion into Facebook, based on a valuation of $50 billion for the social networking behemoth. Twitter had received funding worth close to $200 million in December 2010, with a valuation of $3.7 billion. Here, it must be mentioned that, with revenues pegged at $45 million at the end of 2010, Twitter continues to remain unprofitable.
Based on these investments, it’s clear that a huge premium is being placed on ‘hot’ Internet startups. So, the inevitable question is – do we have a bubble that’s waiting to burst? Do let us know what you think. You can write to us at firstname.lastname@example.org.
Source: The Wall Street Journal
Image courtesy: http://topnews.in/
Sriram Mohan | YourStory | 24th February 2011 | Bangalore