Business social networking site LinkedIn said this week that it has raised a record $53m (£27m) in new funding from investors.

Venture capitalists now value the Silicon Valley start-up at more than $1bn, the company said, making LinkedIn the most valuable business networking site in the market.

LinkedIn claims that the valuation reflects investor confidence in online communities, and demonstrates that LinkedIn's business model is different to that of many companies of the dotcom boom in the late 1990s.

Last year Microsoft spent $240m on a 1.6 per cent stake in Facebook, valuing the firm at $15bn.

Martin Warner, the new media entrepreneur behind the Technology of Tomorrow 08 event, said that the valuation for LinkedIn was about right.

"Although the site does have limitations, it has broken some considerable new ground in the business social networking space," he said.

"However, the sector still has strong potential as there is space for business users to have a richer and more interactive experience in social networking."

Warner added that large and small companies are entering a "new paradigm" in the way they network and build relationships in the global marketplace.

"Technology plays a huge role in helping organisations and professionals to connect in a cost-effective way," he said.

Microsoft recently launched a prototype social network dubbed TownSquare, similar to LinkedIn but designed for company intranets.