24th August 2012  Tagged Receives Funding as Facebook Shares Fall.

Social network Tagged has raised $15 million in capital financing, indicting investors are still interested in getting hold of stock in growing networks even as Facebook (FB) shares continue to fall.


Tagged describes itself as a social discovery website, more concerned with helping users find new people then connecting with those they already know. Growing slowly from its foundation in 2004, the company expanded rapidly in 2011 when it acquired online gaming companies' hi5 and WeGame, social messaging client Digsby and TopicMarks to help improve friend suggestions. As a result of these acquisitions Tagged's user base grow to over 300 million across 220 countries and revenue for the year grew 35% to $43 million.


CEO Greg Tseng said that while the company has been profitable for the last four years and they don't need capital to fund operations, "we are also opportunistic and will use these funds to further Tagged's leadership and innovation in the industry. The growth capital will also enable us to make additional strategic acquisitions, accelerating us toward our next 300 million members."


Financing was led by Lighthouse Capital Partners and Comerica Bank and comes in the wake of the falling share price of social networking stalwart Facebook. Although the company is on the verge of hitting its 1 billionth user shares stand at just under $20, almost half of their $38 IPO price.


Earlier this month one of Facebook's earliest investors and non-executive director Peter Thiel, who acquired 10% of the company's stock for $500,000 in 2004, sold over 20 million of those shares as soon as the lock-in ended. Having sold 16.8 million during the IPO Thiel netted more than $1 Billion and now holds only 5.6 million shares, which is seen as a massive vote of no confidence in Facebook. There from the start, Thiel has a solid knowledge of what's going on inside the company; if he believed that the shares were worth closer to the $38 float price he'd still be holding onto them.


There are still two more lock-in ending dates coming up when staff and owners of pre-IPO stock will be able to cash in on their holdings. Considering many got their shares for less than $1 or as part of their work contract the share price could fall further as owners take massive gains iregardless of the share price. Even on private trading sites like Second Market Facebook shares were going for over $30 a share in the months before the IPO was announced. Pre-IPO stock in companies such as Facebook, Groupon (GRPN) and Zynga (ZNGA) returned massive gains, even as Groupon slumps to $4 from $25 and Zynga falls to $3 from a high of $14. In the land of tech boom 2.0 the early bird is king.



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