p2pnet - rss feed: China blog firm’s High Hopes
p2pnet.net News:- BlogChina.com, which earns by placing advertising on blogs, says it’s about to list on NASDAQ —- with a market capitalization of $1 billion dollars.
The firm currently claims to have two million bloggers and wants 10 million by the end of the year, says the South China Morning Post.
BlogChina founder and ceo Fang Xingdong, who apparently came up with bo-ke, the Chinese word for blog, “started with US$500 million in seed capital from Softbank Asia Infrastructure Fund and will receive a second round of funding of US$10 million this month from a group of six venture capital firms based in China and the United States,” it says.
But if you’re contemplating taking a header into this, maybe you should think again because, “There’s a lot that just doesn’t seem right about this story ,” observes techdirt.
“First, anyone can say they want to go public at a particular valuation - but actually doing so is a very different story. And, considering the two sources for the article are the company’s founder/CEO and its primary investor, you have to imagine they have the incentive to pump up the possibility of a huge deal.”
And almost none of the additional numbers provided make any sense, the post says, going on:
“The article notes that the company raised a seed round of $500 million - which has to be a typo. If it’s true, it’s ridiculous. There’s no way any blogging software provider would ever need that much cash - and it’s hard to understand why anyone would ever seed a company with that much.”
And, “To support the idea that this has to be at typo, the company says it’s about to raise a second round of $10 million. If the seed was $500 million and the next round is $10 million, you have to imagine that those new investors aren’t getting any noticeable amount of equity.”
On top of that, “if the company actually does go public the $1 billion you have to wonder how much of a return any of the investors could see - as they already pumped half that in cash into the venture,” says techdirt, which goes on to point up other difficulties and concludes:
“The company makes its money by putting ads on peoples’ blogs. Of course, there are a ton of blogging products out there that won’t put ads on the sites, or that will let people put their own ads on their own sites - allowing users to make money. So, even if this company makes some money, it’s hard to see how it’s sustainable.”
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See:-
South China Morning Post - BlogChina aims for Nasdaq, July 1, 2005
techdirt - Is The Blog Bubble Going To Hit Wall Street?, July 7, 2005
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