Needing cash to pay for the computer servers to keep its rapidly growing business running but reluctant to part with more equity to buy basic equipment, Facebook Inc. has opted to take its latest funding in the form of a loan that it will be able to pay back without diluting owners' stake in the company.
Facebook, whose value has been the subject of constant speculation -- particularly in the wake of Microsoft Corp.'s [MSFT] $240 million purchase last year of a 1.6% stake in the company -- has raised an additional $100 million from TriplePoint Capital, which specializes in lending money to startups.
While the deal was positioned as a smart way for Facebook to hold onto its equity, skeptics suggest that the company may have been unable to find VC equity investors willing to stomach its current valuation. The Microsoft deal valued Facebook at about $15 billion, and The New York Times last week speculated how it now looks like the software giant may have overpaid for its stake, considering that Facebook has not yet figured out how to monetize its skyrocketing traffic.
But for the moment, the momentum appears to remain with Facebook, which has not lost its luster as Silicon Valley's most unstoppable company and continues to win workers away from Google Inc. [GOOG]. The latest defection came last week when Elliot Schrage, Google's vice president of communications and public affairs, left to head communications, government relations and corporate marketing at Facebook. - Andrea Orr
See May 9 story on Facebook funding from BusinessWeek.com
See May 9 story on Facebook valuation from NewYorkTimes.com
See May 12 story on Facebook's valuation on TechTicker.com
See May 6 story on News.com on Schrage's departure for Facebook
See October 2007 story on Microsoft's investment in Facebook from TheDeal.com
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