Facebook Raising Another $100 Million to Fund Increasing Server Costs
Facebook is growing like gangbusters both domestically and internationally, but it costs a lot of money to push billions of photos around the world every day.
In order to help fund its ever growing infrastructure, Facebook has been trying to secure an additional $100 million in debt financing recently, BusinessWeek reports. Facebook would likely use the proceeds to finance leases on more servers.
A Facebook spokesman says the effort is simply part of the normal course of business. Equipment leases offer lower up-front costs and certain other advantages over purchases. “Facebook always seeks to keep its costs of capital as low as possible, particularly in these uncertain economic times,” the company said in a statement issued to BusinessWeek. “Along with other Silicon Valley companies, we rely on a range of tools to do so, including equipment lease lines to acquire equipment.”
It was this time one year ago that Facebook closed a $100 million line of credit from TriplePoint Capital. At the time, Facebook reported 70 million active users. Today, Facebook reports over 175 million active users. 70% of new users are outside the United States.
While we don’t know exactly how much Facebook spends on equipment lease lines, it’s likely “tens of millions of dollars a year,” Frank Gillette of Forrester says. Facebook has drawn down $60 million of its $100 million credit line from TriplePoint, BusinessWeek reports.
To date, Facebook has raised at least $440 million in total debt and equity financing, including $240 million from Microsoft in 2007 as part of a preferred equity investment and strategic alliance that valued the company at $15 billion, $100 million investment from Chinese billionare Li Ka-Shing in early 2008, $100 million loan from TriplePoint in May 2008, and an undisclosed investment by Germany’s Samwer brothers early last year. The Samwers are also investors in German Facebook clone StudiVZ, which Facebook is currently suing.