Who says crazy dot com valuations are dead? Not financial investors, who remain keen to spend on social networking platforms.

LinkedIn announced last week it had secured $53m (£27m) in funding. The new investment, which represents about five per cent of LinkedIn, values the company at $1.015bn (£515m).

The news followed Microsoft’s $240m (£122m) investment in Facebook last year, which helped value the platform at $15bn (£7.6bn).

Such valuations illustrate the potential strengths of social networks, with firms such as LinkedIn drawing revenue from advertising, job search and subscriptions.

The problem is that there are only so many social networks that individuals will be willing and have the time to participate in.

Future growth will rely on regional variations, says LinkedIn managing director Kevin Eyres.

The firm expects to invest more heavily in the European market, and hopes a regional approach will help members to “derive more value from their network”.

Some individuals have already attempted to make more from their network, such as a former employee of recruitment firm Hays who allegedly used LinkedIn to approach clients for his own agency. The High Court, however, ordered him to hand over the business contacts he built up on his personal page.

Employers will see the decision as a potential step change ­ particularly firms that struggle to understand how to provide and monitor social networking.

Executives often worry that workers are using networks to leak corporate information.

Such concerns are understandable, with one-third of IT professionals saying that they use their privileged rights to gain access to information that is confidential or sensitive, according to Cyber-Ark Software.

The High Court decision shows firms will go to significant lengths to protect confidential information.

While venture capitalists will be keen to back innovative ideas, entrepreneurs need to think carefully about how their intellectual property has been generated.

Modern forms of collaboration can help create value, but only if you play by the traditional rules of business.

What do you think? Read Mark Samuels’ blog at:
http://knowledge.computing.co.uk