By Michael Liedtke
Associated Press
Wednesday, June 18, 2008

SAN FRANCISCO, June 17 -- Four venture capital firms are betting that the Internet start-up LinkedIn is worth $1 billion, highlighting the lofty hopes riding on online services that connect people with their friends, family and business associates.

The valuation is implied by a $53 million investment to be announced Wednesday by Bain Capital Ventures, Sequoia Capital, Greylock Partners and Bessemer Venture Partners.

The investors received a combined 5 percent stake in LinkedIn, whose Web site helps people network with professional colleagues.

It's one of the richest appraisals for a Silicon Valley start-up since Microsoft paid $240 million for 1.6 percent of Facebook late last year. That deal valued Facebook, a social networking site, at $15 billion.

The Facebook financing in turn helped several other start-ups that promote online socializing to promote themselves.

Ning and Slide wrangled implied valuations of $500 million to $560 million when investors poured more money into them earlier this year, while RockYou was valued between $200 million and $300 million in a deal completed last week.

LinkedIn has said its emphasis on connecting executives, other ambitious employees and dealmakers gives it a demographic edge over more recreational online networks, which cater to students and other less-affluent consumers.

About 23 million people in 150 countries have set up profiles on LinkedIn, with 1.2 million members signing up each month.

Relying on a mix of advertising and fees, LinkedIn hopes to generate as much $100 million in revenue this year. Management said the privately held company is profitable but won't provide figures.

Facebook, by comparison, has more than 70 million members worldwide and is aiming for $300 million in revenue this year.

Both Facebook and LinkedIn are expected to go public in the next two years if they don't sell to a larger company before then.

Some industry analysts have touted LinkedIn as a logical fit for Microsoft now that it has abandoned its efforts to buy Yahoo, while Rupert Murdoch's News Corp. also has been mentioned as a suitor.