• Facebook, as everyone pretty much knows now, rocketed to popularity starting in 2005 and
hasn’t looked back since. As you might expect from a highly successful, capital-intensive, hightech
operation that’s growing at blazing speeds, the company has gone through several rounds of
financing to finance business growth. We’re going to ask you to look at that financing and explain
to us what happened.
• Though a savvy researcher could find these transactions herself via Google if she truly wanted to,
we’ve gone ahead and pulled the big ones up for you in chronological order to save you some
time. We encourage you to investigate each of these further, however. There’s no shortage of
background on each of these. Here they are in nice news-bite capsules for digestion:
o The Facebook group announced that it has raised between $10 million to $12 million in
first-round financing led by Accel Partners on April 15, 2005. As a part of the transaction,
Jim Beyers, a Managing Partner at Accel Partners, joined the company’s board. The
post-money valuation of the company was $100 million.
o Facebook, Inc. announced that it has raised $27.5 million in its third round of funding led
by new investor Greylock Partners on April 19, 2006. New investor MeriTech Capital
Partners and existing investor Accel Partners invested in the transaction. The postmoney
valuation of the company was $525 million.
o Facebook, Inc. announced that it will raise $240 million in an equity round of funding from
new investor Microsoft Corporation on October 24, 2007. As a result of the transaction,
Microsoft Corporation will now hold 1.60% stake in the company. The round was raised
at a post-money valuation of $15,000 million.
o Facebook, Inc. announced that it has raised $200 million in funding from Digital Sky
Technologies Limited on May 26, 2009. Digital Sky Technologies Limited invested in
preferred stock and acquired 1.96% stake, valuing the company at $10 billion.
• So what really happened here? What were the major events surrounding and shaping these
investments? We want you to tell us the story of the business as it unfolded through these
massive transactions.
• In order to successfully complete this assignment, you’ll have to rely on your powers to navigate
the world-wide web and your ability to work backwards a bit. The information is out there if you
know how to look. Remember that until recently, this was a private company, so we can’t easily
verify estimates on these financial numbers. So, be sure to justify your thinking with plenty of
evidence from similar businesses and events.
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