Making Connections Pay: LinkedIn Files for IPO

LinkedIn, one of the oldest social networks focused on business professionals, has filed documents with the U.S. Securities and Exchange Commission (SEC) to trade on the public market, seeking to raise up to $175 million. It is a hotly anticipated public offering and with good reason. The SEC filing contains several gems, such as the fact that LinkedIn’s personalized recommendation features typically involves the processing of over 75 terabytes per day. Since its inception in 2003, Mountain View, Calif.-based LinkedIn has grown to a company that has sales of $161.4 million in the first nine months of 2010 and profits of $10 million for the same time period, according to the S-1 filed with the SEC.

While LinkedIn’s offering won’t quench the demand for IPOs from companies such as Facebook or Zynga, the fact that it’s hitting the market first could not only help set expectations, and eventually valuations, for other hot startups, but also likely make it a stronger candidate because of its focus on business as opposed to consumer networking.

Sure, the company has its competitors and detractors in a market cluttered with social networks both personal and professional, but the timing is also auspicious since hiring appears to be picking up. According to a national survey of chief financial officers by Bank of America, 47 percent of companies with revenue between $25 million and $2 billion plan to hire in 2011. Currently, LinkedIn is making 41 percent of its revenue from its “hiring solutions” business that helps recruiters connect with the best candidates.

The company, can use its offering to acquire companies to round-out its business oriented offerings. LinkedIn — which was started by Reid Hoffman, widely recognized as the dean of social networking — earlier this week acquired CardMunch, a little start-up that allows you to take snapshots of business cards and translates them into electronic address cards.