Facebook funding talks cause friction

 

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By Reuters

Posted on 30 Apr 2009 at 14:54

Facebook's decision to start a fresh round of funding talks has caused friction with existing investors, reports suggest.

According to the New York Post, Facebook has held "valuation discussions" with a number of equity firms. The talks are believed to have been informal with no firm plans as yet drawn up, sources told the paper.

Facebook could not be immediately reached for comment.

The private-equity firms are thought to value the website in the $2 billion to $3 billion range, lower than Facebook's estimate of $5 billion to $6 billion.

The talks have created friction with Facebook's existing investors, who have poured in $400 million into the website and would like a return on their investment before seeing their stakes diluted through a new round of funding, the paper said.

Facebook's existing investors include Greylock Partners, Meritech Capital Partners and Microsoft, which has invested $240 million in the social networking site.

Providence Equity Partners, General Atlantic, Bain Capital and Kohlberg Kravis Roberts, citing multiple sources close to or involved in the situation.