Free Facebook Financial Funding Essay Sample
Facebook can be elaborated as the biggest and largest network that keeps worldwide individuals and organizations socially involved and connected. It has more than 500 million people and over 2000 college campuses who are the current users in day to day activities. Formation of Facebook was in mid February 2004 by a Harvard student named as Mark Zuckerberg. It was well accepted and articulated by most Harvard students and within weeks, schools in Boston increased demand for its operations. Networks were in a huge demand due to the need for communication between college students within the Boston neighborhood thus encouraging Mark Zuckerberg to recruit two of his pals, that is; Dustin and Chris Hughes to facilitate the networking of Facebook. It all started as a college network before it evolved to a profit based organisation, it was firstly recognized as a physical paper book (Exeter Face Book) in Zuckerberg's high school before Zuckerberg officially brought it into the internet.
Facebook was foremost funded by first investor Peter Thiel (pay pal co-founder) at an investment of $500,000 but with increased user number on Facebook, there was a second round of funding from Accel Partners of $12.7 million in mid 2004, with the deal valuation of around $100 million. Facebook also made announcements of financing by Accel partners ranging $10 million to $12million during 15 April 2005. These investments of Accel were due to the continuous milestone achievement of Facebook group and the popularity it created in the overall long run and this assisted in grouping of Facebook accounts and spread to all who had emails.
After amplification in face book operations the third funding came from Greylock Partners and Meritech capital partners. Valuation after these investments added to a total amount of $525 million on 19 April 2006. Facebook had initially raised a total amount of $27.5 million and this was lead by the funding company Greylock Partners. In Greylock investments' deals it expected to have similar share increase as Facebook Inc investments'. The capital achieved was use to add an enormously admired photo sharing aspects in the area and facilitated Facebook connections. This valuation and increase in budget capacity made it possible for Facebook to venture into work networks and increase its overall profitability; the immerse cash was essential in promotions and marketing services for the Facebook group. This funding made Facebook a multi skilled enterprise and it made continuous networks surpassing the 20,000 target.
The next funding was from Microsoft dealers who invested a total of $240 million; they were ready to posses 1.6 percent of the company worth and maintain the outflow of networks in Facebook. Microsoft was eager to acquire the share of Facebook and to outnumber goggle in the bidding of the company share. Facebook after the immerse support from Microsoft it made some huge profits and some good investments opportunities thus becoming the most profitable and valuable assets in United States. The internet company ranked it as the 5 th most essential and valuable company and yet its annual revenue ranged at $150 million. Facebook at that time of Microsoft investments had a valuation of $15 billion. This ensured Facebook technological advancement and continued networking operations throughout the period.
Capital infusion was finally funded by Digital Sky Technologists who acquired 1.96 percent stakes of Facebook. Facebook had gained a funding of $200 million from them and its post valuation resulted to $10 billion making Facebook top ten ranked internet profitable facility in 26 may, 2009.
The type of financing used here can be described as an equity financing by interested companies. It is a venture capital funds that relies on sound financial capacity of the firm or organisation to be funded. High net worth firms like, Accel partners, Greylock Partners , Meritech capital partners and Microsoft utilized the investments opportunities by providing the cash. Investments of up to $10 and $100 million were made to ensure high return rates and for exponential capital growth.
The company corporate bubbly valuation is well explained behind the large investments opportunities that pop up in its funding and overall financing. Valuation of Facebook was estimated to $10 billion. In valuation of a company by outside investors, the decision is dependent on the distribution of net capital of the Facebook group; example in Apple's company review, there was increase in price per share and enormous investments that reflected the companies' valuation outcome and prospects it expected. Outside investors thus tend to reflect on companies activities and major their valuation decision on its Venture capitalism.
Facebook can be estimated to have financial implied valuation of $525 million. Facebook accounts for revenue of $150 m and projected revenue range from $300 to $350 m, projected expenditure of $200 m these are financial analysis before Microsoft $300 million investment deal which made the valuation to rise to $10 billion.
In conclusion the increased value of rounds of Funding of Facebook group did not have a "down fund" (where the price per share of the round that was made earlier is lower than the previous funding round) aiming at compensating for valuation of loss during the different funding stages and development. The marketing strategy has become enormous in the Facebook undertakings and as greatly influenced its popularity and its overall value.