Russian billionaire, venture capitalist, and space visionary Yuri Milner, 55, funneled millions of Kremlin dollars into Facebook, newly discovered documents that detail offshore dealings of the world’s elite have shown over the weekend. Eight years ago, CEO Mark Zuckerberg gave us a glimpse into just how important the early investment by Milner was for the growing company.
When Digital Sky Technologies, Milner’s tech company, acquired a $200 million stake in Facebook in 2009, the barely 25-year-old Zuckerberg told The Guardian about what he was planning to glean from the investment: “These guys really have a unique profile, they are not the traditional investors that you get at a stage like this,” he said. “They have a lot of experience that they can bring.”
This was very specific experience: “One of the things that was most interesting to me about DST’s portfolio is they have a large number of social networks and each of them monetizes in different ways and all of them effectively.”
The portfolio included Vkontakte, Russia’s copy-cat equivalent of Facebook, and several other social media platforms across 13 European countries. The networks were making money from online advertising, as well as micropayments, The Guardian reported in May 2009.
Milner told Tech Crunch at the time that his investment was “good business” and that he was comfortable with Facebook’s valuation of $10 billion because the company had “very unique perspective on social network monetization.” While investors then worried whether Facebook could be profitable, Milner had a unique perspective based on his social media investments in Russia. “You see how social networks have been monetized in our part of the world, and we’re just doing our math and coming up with numbers that we feel very comfortable with going forward,” he said.
A month later, DST bought up to $100 million of shares from Facebook employees, and in 2011, Milner invested an additional $50 million into the Silicon Valley giant. Milner also founded a venture capital firm, DST Global, and his companies would eventually hold 8% of Facebook and 5% of Twitter. Milner and Zuckerberg became friends, according to The New York Times, and met monthly. The Russian billionaire sold off his holdings several years later. Facebook has grown rapidly since then, its quarterly revenue topping $10 billion for the first time according to its latest report.
The trove of documents revealed this weekend by various news organizations around the world, dubbed “The Paradise Papers,” suggest that the money for the early investment in Facebook came in part from state-backed Russian companies. Milner maintains that backing was purely economic, not political, in nature.
The New York Times reported that through shell companies, Milner’s DST venture firm received money from Gazprom Investholdings, a financial subsidiary of the Kremlin-backed energy giant Gazprom, which supplies much of Europe’s natural gas. The subsidiary’s director was Alisher Usmanov, an oligarch close to Russian prime minister Dmitry Medvedev, also known to be Milner’s business associate.
Milner himself was dubbed by Wired in 2011 “the most successful investor in social media.” In addition to Facebook and the Russian social platforms, he has also invested in Airbnb, Groupon, Spotify, and Zynga, as well as Chinese internet giant Alibaba. Milner graduated from Wharton business school in the US and originally trained in Russia as a physicist. Over the last several years he has put hundreds of millions of dollars into scientific endeavors, most notably the search for life outside of Earth.
Sign up for the Quartz Daily Brief, our free daily newsletter with the world’s most important and interesting news.
More stories from Quartz:
- Jay-Z has figured out how to make concerts cheap—by selling crazy expensive tickets
- Laughing at Trump in Japan misses the point—and plays right into his hand