Despite the rumors, we all know widgetmaker RockYou isn't really worth $400 million. Not with the way ad buyers feel about spending on social media. We hear RockYou's latest investor, Doll Capital Management — which funded the company with another $35 million today — didn't value the company at $400 million either. "I believe the round was priced at $250 MM, and definitely not higher than $300 million to $325 million," an executive familiar with the deal says.
Why the $150 million drop from March to June? In part, RockYou founders Lance Tokuda and Jia Shen can blame Facebook's spam-killing redesign, which will eliminate some of the tools RockYou used to increase the popularity of its widgets. But our source takes a shot at Tokuda and Shen, too. He tells us:
The reason the round took so much time was because the valuation expectation was inflated. They had unrealistic expectations and "team" really matters when you raise capital.