LinkedIn offering could prod other Internet firms to go public

By Michael Liedtke
Associated Press / January 28, 2011

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SAN FRANCISCO — LinkedIn Corp., the company behind the largest website for professional networking, plans to raise at least $175 million in an initial public offering of stock that could open the IPO floodgates for other widely used online services that connect people with common interests.

The IPO papers LinkedIn filed yesterday put the 8-year-old company on a path to make its stock market debut in the next three to four months, barring any major stumbling blocks.

It might be the most highly anticipated IPO in the technology industry since software maker VMware Inc. went public in 2007, said Scott Sweet, senior managing partner of IPOBoutique. After VMware, which is majority owned by EMC Corp. of Hopkinton, Mass., raised about $900 million in its IPO, the Silicon Valley company’s stock soared by more than 70 percent in its first day of trading.

If successful, LinkedIn’s offering will be a boon for Boston-based Bain Capital. Bain’s venture arm led a $53 million round of funding for the company in 2008, along with earlier investors Sequoia Capital, Bessemer Venture Partners, and Greylock Partners. The earlier investments were made from those firms’ West Coast offices; Greylock, an old name in Boston venture capital, moved its headquarters to Silicon Valley in 2009.

When Bain Capital made its investment, LinkedIn was valued at $1 billion. Wall Street estimates of its current value are as high as $2.5 billion to $3 billion.

LinkedIn’s filing could encourage other rapidly growing Internet services to finally test the public markets after amassing zealous followings among millions of users. Other likely candidates include coupon service Groupon, which rejected a $6 billion takeover bid from Google Inc. last year; game maker Zynga; messaging service Twitter; and potentially the biggest investment opportunity of all, social networking phenomenon Facebook, which has already indicated it was likely to file its IPO plans by the end of April 2012.

LinkedIn, based down the street from Google’s Mountain View headquarters, is the most mature of the group. It started in 2003, a year before Facebook founder Mark Zuckerberg launched his website as a Harvard sophomore.

Since then, Facebook has emerged as a hot spot for having fun and wasting time while LinkedIn has positioned itself as a place for getting down to business.

Kibitzing with friends and family has proven to be vastly more popular than contemplating work. More than 90 million people have set up profiles on LinkedIn, compared with more than 600 million Facebook. But LinkedIn company earned $1.85 million on revenue of $161 million during the first nine months of last year, according to the IPO filing.

Morgan Stanley and Merrill Lynch are the main investment banks steering LinkedIn’s IPO.

Beth Healy of the Globe staff contributed to this report.