When 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.