Write a paper in which you do the following: [NOTE: Be prepared to write at least 10-12+ pages.]
1. Briefly describe the type of financing that was being used here and why it was used for each round of funding.
2. Speculate as to what the money was used for after each successive round of financing. (Don't forget, Facebook was raising money to finance certain projects.)
3. Provide an explanation behind the company's bubbly corporate valuation during this time.
4. Determine how outside investors were valuing this company. (Hint: look at similar businesses.)
5. Estimate the company's major financial numbers (revenue and net income) based on the implied valuation of the most recent investment.
NOTE: Be certain that you carefully read each of the Rubric's requirements....and that you properly address each one in your paper.
Because everyone will be researching Facebook and MySpace, a sample paper cannot be provided for this assignment.
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Assignment - Section #1 -- Rounds of Financing
Continue to work on your Facebook paper, remember that you are comparing Facebook to MySpace-as that is the only other company at the time that was engaged in this type of online, virtual place for people to interact.
There are several major steps before Facebook had its own Initial Public Offering (IPO). The first three steps happen when a company is private: seed, angel and venture rounds. The final type of financing is the IPO. The seed round of funding is the initial capital to initiate the company. The venture round also consists of Series "A", "B", "C" and "D" stock. As the company progresses through these steps, more shares get allocated to the external parties for funds.
Note: Series "A" round - this name is typically given to a company's first significant round of capital financing. The Series "A" funding refers to the class of preferred stock sold to investors in exchange for their investment. It is the initial series of stocks before the common stock and common stock options issued to company's founders, employees, friends and family, and angel investors.
If you like, you can use the list below as part of your paper's outline.
Professor Pellitteri
Step 1- Seed Round:
Step 2- Angel Investments:
Step 3- Series A, B, C, and D
Series A funding:
Series B funding:
Series C funding:
Series D funding:
Step 3: Private Equity:
Step 4: Initial Public Offering: