Linkedin, the social networking site of choice for business users, sparked renewed speculation of a buyout following a $53 million funding round that has valued the start-up at $1 billion.

The valuation, which came when a new investor, Bain Capital Ventures, bought into the venture-backed site, is one of the highest for any networking site, and follows the sale of Bebo, the youth-focused site, to AOL for $850 million in March.

News Corp, parent company of The Times and Times Online, bought MySpace, one of the earliest networking sites, for $580 million in 2005.

Linkedin, which counts senior executives from all the FTSE 100 and Fortune 500 companies among its members, has attracted interest from buyout firms because of its affluent subscriber base, which some say means it will become more profitable than other networking sites.

Whereas most social networking sites rely on advertising for the bulk of their revenues, Linkedin has convinced a sizeable chunk of its members to pay upwards of £10 a month for the privilege of being able to contact high-ranking executives at FTSE-listed companies via the site. About a quarter of the $80-100 million it expects to make this year is derived from subscription services.

The remainder, in equal share, comes from display advertising - for which the site can charge premium rates because of its high net worth users, classified job listings pages, and other corporate recruiting services.

Linkedin, which has attracted $80 million of funding from well-known Silicon Valley venture capital firms, has been linked to several potential suitors, including News Corp, which recently bought Dow Jones and is rumoured to be interested in the site's reach among business users.

News Corp declined to comment. Kevin Eyers, the manager director of Linkedin in Europe, denied it was looking for a buyer, saying that it was profitable and that it wanted to "continue to grow as an independent company." "We have no intention of selling," he said.

Linkedin, which attracts 7.5 million visitors a month, according to comScore, has less than a third of the users of Bebo, which AOL bought in March, but the $1 billion valuation was justified because of its more varied business model, which made it more robust than sites reliant on advertising alone, analysts said.

"It's clearly a valuable business. It's done a good job positioning itself as a place to recruit and be recruited, and the diverse revenue streams are absolutely vital," said Mike Reid, the director of venture capital at 3i, the private equity firm. He added it would only face a threat from more specialist, industry-specific social networking sites, of which there weren't any.

Facebook, the world's most visited networking site, according to comScore, was notionally valued at $15 billion after Microsoft paid $240 million for a 1.6 per cent stake last year. Many observers said, however, that the investment was largely designed to shore up an advertising partnership between the two companies, and did not reflect Facebook's true worth.

Linkedin's valuation comes at a time when the owners of some social networking sites, including News Corp, have admitted that such properties are not generating advertising revenue as fast as they would like - mostly because of increased competition between sites.

Facebook, which is visited by 116 million people a month - more than 15 times the number that visit Linkedin, is predicted to earn about $265 million in advertising revenue this year - only about 3-4 times Linkedin's total earnings.

According to eMarketer, UK-based advertising revenue on social networking sites will rise by 77 per cent to £115 million in 2008, but the annual growth rate will slow to just 10 per cent over the next five years.

Linkedin was it was set up 6 years ago by Reid Hoffman, a serial internet entrepreneur who was one of the early investors in PayPal, the online payment service which was sold to eBay for $1.5 billion in 2002.

The current round of investment was led by Bain, with additional funding from the site's existing backers, Sequoia Capital, Greylock Partners, and Bessemer Venture Partners.

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