Facebook Not Happy With Current Funding Offers

In the book “Founders at Work”, there’s an interesting interview during which Paul Graham is asked by Jessica Livingston about what worried him the most while at Viaweb. He states his biggest concern was “Running out of money. That was the big worry. Running out of money and having to go and get more funding. Getting funding is very painful. It’s so much harder than actually making a successful company.”

For Facebook that appears to be the case as well as the company has begun considering new term sheets according to Techcrunch and Venturebeat. The meat of the story is that Facebook received an offer at somewhere between $2 and $4 billion. The rest of the story is essentially rehashed news which is that the company is on track to generate $400 to $500 million in revenue this year.

While both reports state that the company has around $200 million in the bank, the site’s costs are obviously growing rapidly as they are adding almost a million users a day, expecting to surpass 215 million users tomorrow based on our best estimates. Facebook is also seeing significant growth in advertising but it’s not growing as quickly as its user base.

While some less informed journalists may question Facebook’s viability as a sustainable business, most industry insiders have no question that Facebook will generate a substantial business over the coming years. The only question is how fast they will grow and if they will reach profitability quick enough that they don’t come close to running out of cash in the bank.

It’s going to be a close call as to whether or not the company files to go public or accepts another round of funding. Whichever route the company chooses it will most definitely be an interesting few months ahead. I would argue that the company needs some serious upgrades to their advertising platform before it can truly become a breakthrough business model but despite the lack of upgrades, growth appears to be significant.

While Facebook may be looking for new funding opportunities, the company is anything but desperate at this point.

Publish date: April 16, 2009 https://stage.adweek.com/digital/facebook-not-happy-with-current-funding-offers/ © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT