LinkedIn raises $12.8M to build out professional network

LinkedIn, the networking site for professionals connect, has raised $12.8 million in venture funding.

The venture capitalists, Silicon Valley’s Bessemer Venture Partners and the European Founders Fund (EFF), an internet focused firm, placed a value of more than $250 million on the Palo Alto company, after the investment.

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This catapults LinkedIn to the rarified group of networks that are actually worth something • though granted, this worth is still on paper • held on the books of venture capitalists, untested by the market.

The company raised the capital because it could do so on favorable terms (at higher values, a company gives away less of the company’s shares in exchange for an investment). Keith Rabois, the company’s VP for corporate and business development, said the cash will let LinkedIn experiment with various products, launching them and then killing them if they don’t work out. The company is already profitable.

VentureBeat hasn’t mentioned the European Founders Fund before. Founded by brothers Marc, Oliver and Alexander Samwer, the firm was behind the launch of eBay Germany (Alando), and Jamba, part of News Group, among others.

The LinkedIn network currently has 9 million users. The company says the number is growing at 100,000 members a week, which suggests acceleration.

We’ve written about LinkedIn’s business model before.

The company recently launched LinkedIn Answers, a service that allows members to ask business-related questions to their contacts (this differs from Yahoo Answers, because LinkedIn’s user has to use their name, and can only pose the question to their network).

LinkedIn is seeing competition from new players. One in Germany, called Xing (formerly OpenBC) recently went public in Germany, and has a wider reach in that country. LinkedIn has moved to expand its presence there.

Next, LinkedIn wants to market its new LinkedIn Experts service, launched on Jan 4. It lets people submit requests for expert advice. LinkedIn locates the top five experts it thinks are appropriate for the task, and lets the searcher hook up with the experts they select from the list — at a rate of $500 an hour. LinkedIn keeps $250, and the expert gets $250. (We’re not sure why anyone would pay this much, though. All they have to do is sign up for LinkedIn’s premium InMail service, which lets them contact the expert directly, and arrange to pay them just $250 straight). But then compare this to the Gerson Lehrman Group, which charges you $10,000 a month to sit down with top five experts in the field, and LinkedIn is a great deal, says LinkedIn’s Rabois. This is high-end stuff, designed for people who are time-sensitive, more than price sensitive. For example, LinkedIn hopes to attract hedge fund mangers, who want to research a particular company. LinkedIn also handles billing, so helps avoid hassles for the expert. Finally, it can track people who bypass the system, and eventual may choose not to help those people, spokeswoman Kay Luo said.

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