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LinkedIn: The IPO Chain Reactor, Raising Money

LinkedIn, a professional networking site based in northern California, filed for IPO last week making it one of the first social networking site seeking to go public.  This is causing much industry buzz as many investors attempt to evaluate the company’s worth and what this means for other companies of its kind.

With roughly 90 million registered users in more than 200 countries, LinkedIn offers a means for business professionals to connect, communicate and stay up-to-date with their contacts, selected industry and groups.  In addition, this site provides a means to find jobs and business opportunities, as well as obtain answers from the community via LinkedIn Answers and LinkedIn Polls. 

"We believe we are transforming the way people work by connecting talent with opportunity at massive scale.  Our goal is to provide a global platform capable of mapping every professional's experience, skills and other relevant professional data to his or her professional graph, including connections with colleagues and business contacts," stated LinkedIn in its SEC filing.

As for how LinkedIn makes its money, LinkedIn offers the normal advertisement space, created Corporate Accounts providing firms full access to the LinkedIn user base to find new recruits instead of paying out to recruitment firms, and a four-tiered account system that gives users the option of adding more features beyond their normal free account.

These forms of revenue streams seem to be working well for LinkedIn, having posted $161 million net revenue in the first nine months of 2010.  LinkedIn is backed by its underwriters Bank of America Merrill Lynch, Morgan Stanley and JP Morgan Chase and aims to raise roughly $175 million in its initial public offering.

It will be interesting to see how things progress with LinkedIn’s IPO, as this may lead in a slew of other similar companies, such as Facebook, following suit in playing in the public stock arena.

[ Source: Yahoo News, Reuters ]