June 28, 2011, 9:44 AM

Is Facebook worth more than $70 billion?

Based on investment fund GSV Capital Corp.’s $6.59 million investment it is.

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Investment fund GSV Capital Corp. announced that it has bought 225,000 shares in Facebook at an average price of $29.28 per share.

Because Facebook has roughly 2.4 billion outstanding shares, that price suggests a current valuation of $70.3 billion, according to Sharespost, which provides a forum for employees and other insiders of private companies to sell their stock to investors in private transactions.

GSV is investing in Facebook because it believes the social network has significant potential to generate revenue from advertising and other sources, says Michael Moe, the company’s CEO and founder. “What you’re seeing here is a business the likes of which you haven’t seen before,” he says. “It’s a network, it’s a communication tool and it’s an ad platform. You’re just scratching the surface when look how it’s managed to generate revenue.”

In terms of display ads, Facebook is already gaining significant traction. Of the more than 1.11 trillion online display ads U.S. Internet users viewed in the first quarter, nearly one in three were delivered on Facebook, according to web measurement firm comScore Inc.

Moreover, Facebook has increasingly focused on online advertising, rolling out new ad formats such as Sponsored Stories, which lets companies place their logos alongside content from Facebook posts related to the advertiser. Consumers can click the ads, which appear in the right column of news feed pages in a box labeled Sponsored Story, to visit advertisers' Facebook pages.

GSV Capital’s investment in Facebook represents about 15% of its total portfolio. Moe pursued that significant outlay because he believes Facebook is very likely to find new ways to generate revenue. “The business in a linear sense is very attractive for growth because you have a platform that everyone relies on and people build upon,” he says. “It effectively can become its own economy with ads a part of it.”

Moe says that one way Facebook could generate more revenue is expanding the use of Facebook Credits, its virtual currency, so that the Facebook currency can be used to pay for physical goods. However, at the Internet Retailer Conference & Exhibition in San Diego, David Fisch, Facebook’s director of business development, said that the social network does not have plans to expand the use of Credits to tangible merchandise.

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