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November 2, 2007

Jim Breyer: Extra $500 Million Round For Facebook A “Total Fiction”

Erick Schonfeld

33 comments »

facebooklogo4.gifWhen Facebook announced that Microsoft would invest $240 million in the company, a rumor quickly spread, which we noted, that some hedge funds were about to put in another $500 million. Since then I’ve been trying to confirm if the rumor is indeed true, and have heard a variety of unconfirmed stories—it is actually $260 million split between two hedge funds for a total of $500 million; there is no actual deal yet but hedge funds are sniffing around; Allen & Co’s Nancy Peretsman is shopping the deal. Then last night, I was at a dinner with Jim Breyer, the Accel venture capitalist who sits on Facebook’s board of directors (along with Mark Zuckerberg and Peter Thiel). The dinner was for another (hip-hop) social network Accel is an investor in, the Global Grind. Lots of other journalists there, including Silicon Alley Insider’s Peter Kafka. I asked Breyer point blank about the second ghost tranche. And he told us point blank:”Those reports last week were a total fiction.”

He didn’t rule out raising more money from hedge funds, but said nothing has been signed and that it would more likely be in the range of $50 million to $200 million. One thing is for sure, Facebook does not need any more cash. it would only raise more money if it found the right strategic investor. (Incidentally, Accel has invested $12.7 million in Facebook for an 11 percent stake now worth $1.65 billion, and Breyer personally owns one percent of Facebook). Does Facebook have IPO plans? “We won’t go public before 2009,” Breyer told us.

I also asked him about OpenSocial. He confirmed that Google had not reached out to Facebook: “I didn’t get the e-mail.” And when I suggested that it might be in Facebook’s interest to join OpenSocial at some point, he didn’t disagree. “Nobody’s going to beat us because they are more open,” he said.

The evening wound down, and Russell Simmons, another investor in the Global Grind who was also there, said, “I’m going home to watch my bootleg copy of American Gangster.” Kafka and I were not invited to come along.

CrunchBase Information
Facebook
Global Grind
Information provided by CrunchBase
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This entry was posted on Friday, November 2nd, 2007 at 7:14 am and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. BeerCo Software Blog

    November 2nd, 2007 at 9:23 am

  2. Facebook open to OpenSocial, VC says - - mathewingram.com/work

    November 2nd, 2007 at 9:58 am

  3. OpenSocial: The Online Social Networks PR War « OpenSocialSphere

    November 2nd, 2007 at 12:47 pm

  4. Adam Sharp’s Blog » Facebook’s Valuation is NOT $15 Billion

    November 2nd, 2007 at 1:43 pm

  5. Jared Booye.com

    February 1st, 2008 at 7:54 pm

Comments

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  1. Saving Freak

    November 2nd, 2007 at 7:26 am

    Facebook possibly going public in 2009 would be a huge IPO. With the kind of cash on hand they have boasted and the growth of the company there is no doubt the stock could be a real winner.

  2. HypeMachine

    November 2nd, 2007 at 7:39 am

    If at first you do not succeed in creating more hype, just start making stuff up so that Techmeme has more junk for people to talk about. Who has covered the fact that all these Facebook apps are just annoying spam?

  3. James

    November 2nd, 2007 at 7:40 am

    I would short facebook stock

    I hope their ticker is: LOL

  4. Ryan Merket

    November 2nd, 2007 at 7:43 am

    OpenSocial is something new and amazing : FICTION

    OpenSocial is nothing more than glorified Google widgets (see iGoogle).

  5. Pawel Raczynski

    November 2nd, 2007 at 8:12 am

    Right now, they’re worth their weight in gold. Since its all software, this means very little. Unless Facebook can really start to monetize some of their apps or advertising, they will have nothing to IPO but hopes and dreams. The social platform is there, and I for one will be very interested in seeing how they can make money and not annoy their clientele.

  6. Grip

    November 2nd, 2007 at 8:33 am

    Facebook will have no choice but to join OpenSocial. Pretty much every other social network of relevance is already on board, so they’re the odd man out right now. It only makes sense to have a standard language with which to make social apps.

    Programmers should welcome this with open arms, as they can create the apps without having to learn any new proprietary languages (such as Facebook’s FBML).

  7. Ryan Merket

    November 2nd, 2007 at 8:37 am

    Grip #6:
    Do you even know what FBML is? Have you ever seen it, used it?

    OpenSocial is Google & 2nd rate friends attempt to combat something TRUELY revolutionary happening at Facebook.

  8. Ryan Merket

    November 2nd, 2007 at 8:51 am

    Important Quesitons to ask about OpenSocial:
    http://ryanmerket.com/blog/?p=3

  9. techcrunchreader

    November 2nd, 2007 at 8:56 am

    The bigger the potential market is, the bigger the base of developpers will be. Even if FBML is TRUELY revolutionary, or even a better language, does not mean that they will win in the long run.

    Which one is better:
    Windows or Mac OS?
    Now look at their respective market share…

  10. Mark

    November 2nd, 2007 at 9:00 am

    Hate to be the wet blanket, but we (college-aged kids) are getting sick of Facebook.

    It’s called the law of diminishing returns, and FB is on it’s downward slope

  11. Jared Schnelle

    November 2nd, 2007 at 9:04 am

    How can you say that their 11% claim is worth 1.65 billion. I understand the math (15 billion x .11), but does Accel have an advertising deal with Facebook?

    What if Google had taken a 1.6% claim in MySpace when they made the 1 billion dollar search bar deal with them, would you be claiming that because of that transaction that MySpace was worth ump-teen billions? I doubt it, because the business behind the MySpace / Google deal was described as a source of additional revenue for Google.

    I think ignoring the fact that Microsoft did not make an “investment solely in stock” of 240 million, but rather gained a partner on their advertising platform and advertising commitment with FaceBook in addition to the 1.6% stock is very misleading.

  12. Grip

    November 2nd, 2007 at 9:12 am

    @7

    Yes, I know what FBML is, and yes I’ve learned it. But why should I have to learn a new language when I could have just used my existing knowledge of javascript and html? Don’t try to insult my intelligence with your smart ass comments. Sorry you’ve spent most of your time learning to make apps for Facebook. FBML will be irrelevant in the next year. You sould a little bitter about OpenSocial.

  13. Ryan Merket

    November 2nd, 2007 at 9:19 am

    Grip,

    If you actually struggled learning FBML then you might stay away from Google’s OpenSocial. The code is pretty advanced, just a heads up.

    I find FBML extremely easy to use, I coded the TechCrunch app in 4 hours.

  14. Dheeraj Sultanian

    November 2nd, 2007 at 9:26 am

    This whole social space seems like complete vaporware and PR spin. Firstly, no company has made social-targeting ads work, but all assumptions are that it does (with little or no data to back that up). It is possible that instead of providing relevant ads, the big brother feeling will actually lead to a mass exodus of people away from open social platforms.

    Secondly, the only reason my good friend Jim would categorically deny an additional round of funding is to deny a “cashing out” mentality and valuation top for Facebook. Why would they raise so much money in a hurry if the equity was going to increase rather than decrease?

    Targeting ads to active search and passively to content - goldmine, Targeting ads passively not to content but specific users - just plain creepy

  15. nick halstead

    November 2nd, 2007 at 9:42 am

    It won’t be long before Facebook joins OpenSocial, if they don’t then gaining that extra $500m is not going to happen, they are still to prove the revenue model and part of this is why they have not yet release more details about their own ad network, because as soon as it fails the $15b valuation goes down the toilet, they have to get that extra $500m before then.

    sent from: fav.or.it [FID2376]

  16. John Wooton

    November 2nd, 2007 at 9:54 am

    A very interesting read.

    I think even if they were to support the OpenSocial api, they’ll still probably keep fbml (for a while). They’ll just use OpenSocial as a new source of app submissions and hosting.

    Eventually, one will come out on top, though

  17. steveballme

    November 2nd, 2007 at 9:58 am

    Roling the dice with your money….

    http://fakesteveballmer.blogspot.com

  18. Berlin

    November 2nd, 2007 at 10:25 am

    @ 2

    I guess you’ve never heard of Apple

  19. Grip

    November 2nd, 2007 at 10:27 am

    @13

    Where did I ever say I “struggled” to learn FBML? You are delirious.

  20. Phil

    November 2nd, 2007 at 11:10 am

    http://www.crunchbase.com/company/facebook

    CrunchBase shows a 240M investment from MySQL? in Oct 07? That is the MSFT investment?

  21. Your Daddy

    November 2nd, 2007 at 11:14 am

    A few comments:

    1) Breyer either had some drinks in him or had ben smokin’ some Sherm with Simmons to open up his trap as much as he did about FB.

    2) If FB wait till 2009 to IPO, the window on this Social game will be closed, no IPO.

    3) Simmons is going to send some hard pipe hittin knukkles after you for being a snitch and reporting every little thing about what you talk about with other people.

  22. Jack Doe

    November 2nd, 2007 at 11:22 am

    “The evening wound down, and Russell Simmons, another investor in the Global Grind who was also there, said, “I’m going home to watch my bootleg copy of American Gangster.” Kafka and I were not invited to come along.”

    That is b/c Simmons is about 10 million times cooler and more relevant than any tech heads

  23. Your Daddy

    November 2nd, 2007 at 2:07 pm

    I think he actually said, “peace out marks” as he walked out and into his Escalade rollin’ on Dubs.

  24. Rodger

    November 2nd, 2007 at 3:35 pm

    Who is Russel Simmons? the name sounds like the dude from deff jams Let me google the dudes name later.

    I took a peak at global grind, no disrespect but it look like… well I rather not say. Either way to get US$4.5 mil for that is more like charity donation from Jim in my book. I cannot believe what I saw. Simply Amazing stuff.

  25. Rodger

    November 2nd, 2007 at 3:38 pm

    AHHH I knew I knew a little about hip hop, it is that dude http://www.russellsimmons.com/ he came out with what sounds like a really cool book. He has some really cool organization that deals with social issues. Huge respect to the man. But for the site GB well that seems like an amazing site in other ways that I have yet to discover.

  26. HA

    November 3rd, 2007 at 1:02 am

    Man I fell asleep on American Gangster… what happens at the end?

  27. Yishan

    November 3rd, 2007 at 2:45 am

    Which Russell Simmons is this? The hip-hop mogul or the Yelp CTO?

  28. Petri Pokka

    November 3rd, 2007 at 3:49 pm

    Fiction or not, Facebook is next big thing. We can’t see how well it will develop in future, but now it is domination social networks just like MySpace did only a little while ago.

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