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Facebook Doesn't Have to Go Public: Venture Capitalist

Wednesday, 27 Jul 2011 | 1:21 PM ET

Social networking giant Facebook does not need to go public because a flourishing venture capital market provides enough funding to grow without the short-term focus of a public market, according to venture capitalist Roger McNamee.

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“Being private hasn’t hurt them at all,” McNamee, the founder of Elevation Partners, said in an interview with CNBC's "The Strategy Session" Wednesday.

“Now they can do it when it is best for the company strategically," he said.

Wall Street has been buzzing about when the social network will go public.

The latest indications from the company, which has more than 750 million users, suggests it wouldn't go public before 2012.

McNamee, who owns a stake in Facebook, said that a private venture capital market based on “private negotiations involving informed players” is flourishing because of the failure of stock market exchanges like the Nasdaq.

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Nasdaq and the NYSE are no longer about “capital formation” but making revenue on trading volume, said McNamee, who also founded the private equity fund Silver Lake Partners. “Until the exchanges get back to focusing on capital formation, the pressure to go public won’t be there.”

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