Marc Andreessen scores $44 million for Ning:
Ning Funding Raises Eyebrows
A whopping $44 Million for a social-networking tool? Boom or bust?
July 10, 2007
By Alexandra Berzon
By Tuesday, news of Ning’s eye-popping round of funding had traveled around the Valley faster than you could say “TechCrunch” and sent veterans looking backward to headier days: $44 million for a social-networking platform?
“I think many of us investment practitioners worry about the valuations getting frothy, just as in the dot-com boom before the bust. But there are always some big winners and people that can hit the ball out of the park,” said Randy Hawks, managing director of Claremont Creek Ventures, which invests in social-networking tools.
The funding round, first reported as a rumor by TechCrunch, was confirmed by co-founder Marc Andreessen on his blog. A representative said both Mr. Andreessen and co-founder Gina Bianchini are currently at an investment conference in Sun Valley, Utah, and not available for comment. Mr. Andreessen wrote that the funding will be spent on further developing the software, supporting user growth, and “evangelizing” Ning’s products.
The Palo Alto, California-based company offers a free, advertising-supported, consumer-facing social-networking tool that lets users create their own customized social sites around any topic. Think of it as Blogger for the MySpace/Facebook set. Ning also serves up premium platforms that let customers set up their own self- (non-Ning-) branded public networks, or establish private, internal networking systems.
That diverse model has achieved some media attention, and 70,000 total social networks have been created using Ning’s tool or premium platforms. But Ning saw just 435,000 unique visitors gravitate to all its user-created, consumer-facing sites in June, according to comScore. That doesn’t include visits to branded social networks created using Ning’s premium platform, but it’s still pretty paltry when compared with, say, MySpace’s 70.5 million monthly visitors, or Facebook’s 28 million monthly visitors.
Ning’s latest round of funding, led by hedge fund Legg Mason, adds to the undisclosed amounts Mr. Andreessen and his friends have already thrown in. It puts Ning well ahead of its brethren in the field of social-networking software, including such applications as KickApps, which raised $6 million in a first round of funding last year, or Neighborhood America, which has raised about $20 million over several years. Facebook has raised about $38 million in two rounds.
So why all the dough for Ning?
One factor, say observers, is the backing of Mr. Andreessen, who became a household name in tech circles after inventing the modern web browser, aka Netscape Navigator.
IDC analyst Rachel Happe said the scenario is reminiscent of when, in January, Brightcove founder and tech star Jeremy Allaire, who had helped invent Flash, drummed up $59.5 million for his online video platform. “I think that, similarly, investors are taking a bet on Marc Andreessen figuring out the space, saying, ‘Here’s some money, we think you’re the one that can take it to the level it has the potential to go,’” said Ms. Happe.
Ms. Happe has been studying that potential of late, and in early estimates she’s found that the market for social-networking tools will be worth about $290 million in 2009, and about half a billion into the early part of the next decade.
“There’s a lot of opportunity in social-networking software, which is why this is a very crowded space right now,” said Ms. Happe. “Everyone is taking a slightly different perspective and throwing spaghetti at the wall to see what sticks. With this investment, Ning has a lot more flexibility than the others in finding out what sticks.”
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