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Facebook 's History Of Startup Fundraising

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3 Real-life case study: Facebook’s history of startup fundraising explained

Now, I’ve been providing you with an example of an imaginary division of a pie for startup funding. But imaginary funding isn’t quite real life funding, is it?

So, what does all of this look like in the real world – are you really able to get $100,000 here and $3 billion there?

Well, if your startup has what it takes then anything is possible. Let’s look at one successful startup funding process: Facebook.

Idea stage

The idea stage with Facebook is a little murky. There have been instances where people have claimed to have come up with the idea and knowing who had the first light bulb moment is definitely a bit hard.

In reality, there are only a few people
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But Zuckerberg and co had other plans – they new something bigger is on the horizon.
Seed and expansion capital

The networking site starts growing rapidly, amassing users in campuses across the US. By the start of 2005, the site has nearly a million users in Harvard, Stanford, Columbia and Yale.

The company now embarks on a series of investment rounds that bring it closer to an IPO and a series of buyout attempts from rival companies.

First, the company needed more seed money to continue scaling the business – it wanted to move beyond the university campuses.

So, there is a Series A round in 2005.

Accel Partners, a venture capital firm, led the investment round with the total funds raised hitting $12,7 million. The valuation of the company hits $87,5 million.

The investment round featured angel investors Venky Harinarayan and Anand Rajaraman as well, who recalled the investment decision in a Forbes article by stating, “I remember talking to Accel after [an event at Stanford]. The key reason they invested was because they talked to Stanford students and found out that they use Facebook for two hours a day.”

Series B followed shortly in April 2006.

The lead investment came from Greylock Partners, with Thiel and Accell featuring strongly during the round. The total raised this time around stood at $27.5 million, increasing the valuation to $500 million.

Shortly after, Yahoo supposedly tries to acquire the company for $1 billion, which was
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