Facebook is reportedly still in the process of talking to several private equity firms about a significant follow-up investment in the company. According to the New York Post, which tends to be a bit sensationalist at times and is owned by News Corporation, the social networking juggernaut has already held informal exploratory meetings with Providence Equity Partners, General Atlantic, Bain Capital, Kohlberg Kravis Roberts and others to date.
The article cites Facebook to be looking for fresh capital at a $5 to $6 billion valuation, with the potential investors only willing to pour more capital in the company in the $2 billion to $3 billion valuation range. This is almost exactly what we reported earlier when we learned that Facebook may have received a term sheet for an investment at a $2 billion valuation from General Atlantic. The New York Post, however, claims no term sheets have been drawn up to date.
The articles cites unnamed sources with knowledge of the situation, but that none of the companies involved will comment officially or so far failed to return requests for more information. As soon as day breaks in the U.S., we’ll do a bit of poking of our own.
From the mouths of ‘people familiar with the matter’, Facebook’s attempt to raise additional capital is supposedly causing some friction with its existing investors (which include Accel Partners, Greylock Partners, Meritech Capital Partners, Microsoft and Peter Thiel), who are said to be against diluting their shares and urging the company to start squeezing some real revenue out of its now more than 200 million registered users.
As Michael wrote earlier, Facebook may not have a lot of choice:
They’re burning as much as $20 million a month in cash and are dealing with ridiculous growth. They likely have less than two years runway left, and possibly significantly less if they continue to add new users by the tens of millions that are currently flocking there every month.
To be continued, no doubt.