Facebook acquires debt financing.

Palo Alto (Calif.)-based Facebook has secured a $100 million dollar leasing facility to purchase additional servers for its rapidly growing web application. The Company has partnered with TriplePoint Capital, a Menlo Park (Calif.)-based company that specializes in providing debt financing to venture-backed companies. The TriplePoint Capital leasing facility will offer Facebook the flexibility to exchange and replace its equipment during the term of the lease.

Facebook’s need for new servers is two-fold; it will help the Company avoid service interruptions and provide headroom for technology startups that they acquire. It has been rumored that Facebook may target technology startup twitter, whose users have recently complained publicly about slowdowns and outages perpetrated by recent growth.

TriplePoint Capital was established in July, 2005 by James P. Labe, and has provided more than $500 million in debt financing to venture-backed companies, including Google’s YouTube and Slide.

The last thing the entrepreneur wants to do is see those precious equity dollars flowing into equipment purchases. It’s a very unproductive use of equity to plow it into fixed assets.
TriplePoint Capital’s Chief Executive Officer Jim Labe

Many of TriplePoint Capital’s customers have received equity financing from Kleiner Perkins Caufield & Byers, Mayfield Fund, and Sequoia Capital. By using debt financing, Facebook can reserve its $360 million in equity raised primarily through Microsoft Corporation ($240 million) and Hong Kong Billionaire Li Ka-shing ($60 million).

Posted on May 10th, 2008 | By: bootstrap economist | Filed under Banking

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