This story was written by Joseph Tartakoff.
Facebook has raised $500 million so far, but with costs mounting and ad-revenue growth slowing, that's not enough. BusinessWeek reports that the social-networking site is looking for a credit lines of up to $100 million to finance the lease of new servers, which it needs to support its growing membership. "Facebook always seeks to keep its costs of capital as low as possible, particularly in these uncertain economic times," a Facebook spokeswoman says in an e-mail to paidContent.org. "Along with other Silicon Valley companies, we rely on a range of tools to do so, including equipment lease lines to acquire equipment."
But BusinessWeek says Facebook is on the hunt for the funds because TriplePoint Capital, which had provided the company with $100 million in venture lending for equipment leases last May, wouldn't give Facebook additional funds several months ago. TriplePoint Capital CEO Jim Labe says that the company is in discussions with Facebook to possibly give the company more cash.
As the ranks of Facebook members have grown, so have the company's costs. But the company's revenue hasn't kept up, and Facebook has reportedly had to cut its internal revenue projections given the weak ad market. In light of Facebook's search for additional financing, BusinessWeek now asks "whether the social network has enough money stockpiled to stick with its current strategy of emphasizing user growth over revenue or whether the company will have to dial back on growth in the face of the economic downturn."
By Joseph Tartakoff