For people with money in the Russian investment company DST Global, the focus is social networking.
The private company, which is generally known here as DST, may seem but a footnote in the move by Goldman Sachs to invest $450 million in Facebook. But DST’s additional $50 million now raises it and its sister company’s combined stake in Facebook to about $500 million – or slightly less than 10% of the company, making the DST siblings among Facebook’s biggest owners.
When DST, previously known as Digital Sky Technologies, first started putting money into Facebook in 2009, some analysts chalked it up to an effort by novice Russian investors to burnish their technology credentials and gain entry into Silicon Valley. But DST, which is bankrolled by a coal and steel mogul with Kremlin ties, has placed some ambitious, and so far successful, bets. It now owns about 5% of the popular online gaming company Zynga and about 5% of the prominent shopping-coupon company Groupon. And it is said to be interested in investing in another privately held phenomenon, Twitter. A DST representative did not answer phone calls about the deal Monday, which was a holiday in Russia.
But DST’s chief executive, Yuri Milner, has said his focus on social networking reflects insights gained from watching the Russian Internet market develop in the past few years. In 2005, DST began investing in internet companies in Russia and Eastern Europe , where, as in parts of Asia, people adopted social games and the trading of virtual goods faster than in the United States. This, Milner, has said, led to an understanding that social networking business models involving tiny payments from large numbers of users have vast potential in emerging markets. “We chose a strategy of total and unconditional focus on the consumer internet, and I would say, even the social internet,” Milner said.
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