Ning, the social networking platform, just raised a $15 million Series E round of financing at a mind-boggling $750 million valuation. Despite a cratering market, that’s a 50% higher valuation than the $500 million it was worth (on paper) a year ago, when Ning raised $60 million.
Ning was not actively searching for funding, the company told AllThingsD’s Kara Swisher. But when someone like Lightspeed Venture Partners comes along and wants to throw $15 million at you at a 3/4-billion-dollar valuation, it’s hard to say no.
So how is Ning going to make enough money to justify that? Certainly not just through Google AdSense, the ads it’s been placing on most of its 1.3 million social networks, which pay a very low rate.
Earlier this summer, Ning’s executive team — including CEO Gina Bianchini and new marketing boss Julie Supan, recently hired from YouTube — dropped by our office to explain their growth plans. They include:
- Adding millions more users, getting the site up to 60 million users and 3 million networks this year.
- Adding new products and revenue streams, such as a virtual gifts platform later this year. (The company currently makes most of its money through premium add-on services bought by 15,000 of its networks.)
- Developing a new brand advertising platform late this year or next year to hook advertisers up with relevant social networks at high CPMs — perhaps in the $30 range. We’re making this example up, but the way we understand it, it’s the sort of program that might link Trek up with a cycling social network — self-identifying cycling fanatics who probably want to buy awesome bikes.
Will that make enough money to support Ning’s valuation? It won’t be easy: Ning’s rivals like Facebook and MySpace have had a tough time so far making a lot of money off social networking. But matched with Ning’s growth trajectory — adding 2 million users a month — it’s a start.
Disclosure: Ning chairman Marc Andreessen is an investor in The Business Insider.
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