Raising capital is one of the most complicated tasks faced by entrepreneurs, thus it can be quite difficult to evaluate and forecast your options for this process. As Goldman Sachs, Accel Partners, and others clamor for a larger piece of Facebook and its valuation spirals upwards, a look back through all the VC rounds and players that fueled Facebook to be what it is today (fortune.com). Facebook used the four major stages of raising capital: seed round (the initial capital for a company), angel investors (persons who invest in early-stage companies), venture capital firms (managers who invest a large sums of money across a portfolio of companies), an initial public offering (a company sells shares to the public).
From 2005 to 2011, Facebook investors have contributed extravagant sums during multiple rounds of funding as the social network’s own user base has grown by leaps and bounds (fortune.com). When Zuckerberg started his company, he got $15.000 from Saverin for the initial capital to pay for the hosting costs. Facebook raised $600.000 from super angel investors: Thiel invested $500.000, Pincus and Hoffman invested $40.000 each. At this stage, Zuckerberg had to deal with complex security laws, such as not advertising the funding and soliciting only sophisticated investors (investorplace.com). In 2005, Facebook raised its first round of venture capital from Accel partners – nearly $12.7 million, giving company an $87.5 million valuation (fortune.com). In 2007, Zuckerberg looked for a strategic investor. Here, Facebook received $240 million from Microsoft, which helped social network move into global markets; Li Ka-Shing invested $120 million; European Founders Fund invested $15 million (total amount raised from this round to $315 million). In 2010, Elevation Partners brought its total investment to $210 million. In 2011, Goldman Sachs invests $450 million and DST invests $50 million at a 50 billion valuation.
Today, Zuckerberg’s social network empire has become an immensely powerful media organization in its own right (nytimes.com). Zuckerberg had a lot of leverage and great advisers who helped retain control and minimize dilution, positive attitudes, and the right velocity in users’ growth. How much is Facebook worth? Only time will tell, but one thing is certain – whether making profits or losing money, Mark Zuckerberg has taken millions in venture capital funding to give his company the best possible financial footing for success (fortune.com).
Works Cited:
Douthat, R. “Facebook’s Subtle Empire”. The New York Times Sunday Review, 21 May 2016. <www.nytimes.com/2016/05/22/opinion/sunday/facebooks-subtle-empire.html> Accessed 5 Aug. 2016.
Mangalindan, J. P. “Timeline: Where Facebook Got Its Funding”. Fortune Magazine, 11 Jan. 2011, <www.fortune.com/2011/01/11/timeline-where-facebook-got-its-funding/> Accessed 5 Aug. 2016.
Taulli, T. “Follow The Money: From Seed Funding To IPO”. Investor Place, 30 Apr. 2012.<http://investorplace.com/ipo-playbook/follow-the-money-from-seed-funding-to-ipo/#.V6RjvilkjDf> Accessed 5 Aug. 2016
The terms offer and acceptance. (2016, May 17). Retrieved from
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"The terms offer and acceptance." freeessays.club, 17 May 2016
"The terms offer and acceptance." freeessays.club, 17 May 2016
"The terms offer and acceptance." freeessays.club, 17 May 2016
"The terms offer and acceptance." freeessays.club, 17 May 2016
