How Much Money Would You Have Made If You Were Facebook’s First Investor?

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Peter Thiel. Photo: TechCrunch50-2008 flickr

In the summer of 2004, PayPal co-founder and Silicon Valley investor Peter Thiel handed over $500,000 to Mark Zuckerberg and Co. for a 10 percent stake in Facebook. When audiences see this deal reenacted on the big screen in The Social Network, what they could be watching is possibly the single best investment in history, according to entrepreneur Chris Yeh. With Facebook's valuations now pegged at $33 billion, that would make Thiel's stake worth between $2 and $3 billion. This all depends on whether Thiel's shares were significantly diluted and whether the market will support that valuation once Facebook goes public, which a board member recently said will happen after late 2012. But it could amount to a 6,000-fold return on Thiel's investment in eight years. By Yeh's calculation, that's an order of magnitude more than Google's venture-capital investors, who merely multiplied the $25 million they paid for a 20 percent stake in Google 216 times over. Yet another reason we wish we had had half a million dollars in the summer of 2004.

Did Peter Thiel Make The Single Best Investment In History? [Adventures in Capitalism via TechMeme]