Evaluate the qualities of effective corporate governance. Use technology and information resources to research issues in advanced financial management. Write clearly and concisely about advanced financial management using proper writing mechanics. On the first page or in a header, include the title of the assignment, the student’s name, the professor’s name, the course title, and the date. Title and reference pages are not included in the assignment page length. Paper needs to cover the following sections in around 10-12 pages (suggested): Section1. Executive summary of the paper Section 2. Briefly describe the type of financing that was being used here and why it was used for each round of funding. Section3. 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.) Section4. Provide an explanation behind the company’s bubbly corporate valuation during this time. Section5. Determine how outside investors were valuing this company. (Hint: look at similar businesses.) Section6. Estimate the company’s major financial numbers (revenue ,net income, or other financial metrics) during each of rounds for financing. Section7. Conclusion Background: The past two modules have been a bit of a mash-up of different ideas and tools, which makes it difficult to ask you to perform a neat, simple task that covers all the material that we covered. Instead, we’re going to ask you to synthesize the bigger concepts from past lectures. We’re going to do so using a company that most everyone is familiar with: Facebook. Facebook, as everyone pretty much knows now, rocketed to popularity starting in 2005 and hasn’t looked back since. As you might expect from a highly successful, capital-intensive, hightech operation that’s growing at blazing speeds, the company has gone through several rounds of financing to finance business growth. We’re going to ask you to look at that financing and explain to us what happened. Though a savvy researcher could find these transactions herself via Google if she truly wanted to, we’ve gone ahead and pulled the big ones up for you in chronological order to save you some time. We encourage you to investigate each of these further, however. There’s no shortage of background on each of these. Here they are in nice news-bite capsules for digestion: The Facebook group announced that it has raised between $10 million to $12 million in first-round financing led by Accel Partners on April 15, 2005. As a part of the transaction, Jim Beyers, a Managing Partner at Accel Partners, joined the company's board. The post-money valuation of the company was $100 million. Facebook, Inc. announced that it has raised $27.5 million in its third round of funding led by new investor Greylock Partners on April 19, 2006. New investor MeriTech Capital Partners and existing investor Accel Partners invested in the transaction. The post money valuation of the comp ...

1. Evaluate the qualities of effective corporate governance.
Use technology and information resources to research issues in
advanced financial management.
Write clearly and concisely about advanced financial
management using proper writing mechanics.
On the first page or in a header, include the title of the
assignment, the student’s name, the
professor’s name, the course title, and the date. Title and
reference pages are not included in the assignment page length.
Paper needs to cover the following sections in around 10-12
pages (suggested):
Section1. Executive summary of the paper
Section 2. Briefly describe the type of financing that was being
used here and why it was used for each round of funding.
Section3. 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.)
Section4. Provide an explanation behind the company’s bubbly
corporate valuation during this time.
Section5. Determine how outside investors were valuing this
company. (Hint: look at similar businesses.)
Section6. Estimate the company’s major financial numbers
(revenue ,net income, or other financial metrics) during each of
rounds for financing.
Section7. Conclusion
Background:
The past two modules have been a bit of a mash-up of different
ideas and tools, which makes it difficult to ask you to perform a
neat, simple task that covers all the material that we covered.
Instead, we’re going to ask you to synthesize the bigger
concepts from past lectures. We’re going to do so using a

2. company that most everyone is familiar with: Facebook.
Facebook, as everyone pretty much knows now, rocketed to
popularity starting in 2005 and hasn’t looked back since. As you
might expect from a highly successful, capital-intensive,
hightech operation that’s growing at blazing speeds, the
company has gone through several rounds of financing to
finance business growth. We’re going to ask you to look at that
financing and explain to us what happened.
Though a savvy researcher could find these transactions herself
via Google if she truly wanted to, we’ve gone ahead and pulled
the big ones up for you in chronological order to save you some
time. We encourage you to investigate each of these further,
however. There’s no shortage of background on each of these.
Here they are in nice news-bite capsules for digestion:
The Facebook group announced that it has raised between $10
million to $12 million in first-round financing led by Accel
Partners on April 15, 2005. As a part of the transaction, Jim
Beyers, a Managing Partner at Accel Partners, joined the
company's board. The post-money valuation of the company was
$100 million.
Facebook, Inc. announced that it has raised $27.5 million in its
third round of funding led by new investor Greylock Partners on
April 19, 2006. New investor MeriTech Capital Partners and
existing investor Accel Partners invested in the transaction. The
post money valuation of the company was $525 million.
Facebook, Inc. announced that it will raise $240 million in an
equity round of funding from new investor Microsoft
Corporation on October 24, 2007. As a result of the transaction,
Microsoft Corporation will now hold 1.60% stake in the
company. The round was raised at a post-money valuation of
$15,000 million.
Facebook, Inc. announced that it has raised $200 million in
funding from Digital Sky Technologies Limited on May 26,
2009. Digital Sky Technologies Limited invested in preferred
stock and acquired 1.96% stake, valuing the company at $10
billion.

3. So what really happened here? What were the major events
surrounding and shaping these
investments? We want you to tell us the story of the business as
it unfolded through these
massive transactions.
In order to successfully complete this assignment, you’ll have
to rely on your powers to navigate the world-wide web and your
ability to work backwards a bit. The information is out there if
you know how to look. Remember that until recently, this was a
private company, so we can’t easily verify estimates on these
financial numbers. So, be sure to justify your thinking with
plenty of evidence from similar businesses and events
Helpful pointers:
Section2:
Create a complete financial funding table as per below
Date
Funding Rounds
Valuation
Number of users
Investors
2004
Angel
Peter Thiel invests $500,000 for a loan, later converted to a 10
percent stake and eventually reduced to 3 percent. Mr. Thiel
also brings in Reid Hoffman and Mark Pincus.
Oct-04
Mr. Werdegar provides a $300,000 three-year credit line.
and so on...

4. 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. So what
was myspace worth at its peak or IPO valuation before closing
doors
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.
Sample outline
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 4: Private Equity

5. Step 5: Initial Public Offering:
What were the financial resources that MySpace used to get
established? What was its value as it grew?
Section3:
Research and come up with the investigation on what activities
the money was used by Facebook and Myspace
Section 4
Remember, this section is all about determining what factors
were driving the company's "current" Bubbly Valuation--higher
than what one might guess was the company's net book value.
Remember, these are pre-IPO days; therefore, only Angel
investors or others willing to invest millions of dollars in
private deals would have access to the company's numbers. The
general public and average potential investor did not have
access to the Balance Sheets.
We do know, however, that their Balance Sheet would not
contain the types of high-dollar assets associated with
manufacturing firms (equipment, raw materials, work in
process, or finished goods inventory) like Nike, General Mills,
or Pepsi. The B/S would also not contain vast levels of
merchandise inventory, as expected of a retail store like Wal-
Mart, Target, or Macy's. No, FB would not have assets such as
these to build their wealth; the company's value, therefore,
consists of the talent and visions of their managers. (Yes, they
would have had servers and other machinery--but not to the
extent of manufacturing or merchandising firms. Plus, much of
those may have been leased and were not qualifying for
classification as Operating Leases.)
So, there had to be something else going on at the time that was
getting the investment community so excited about FB.....and
willing to say that this company had a brighter future than
MySpace or anything else out there. In this section of your

6. paper, focus on such questions as.... What other companies were
out there, like MySpace and LinkedIn, and what was it about
this new platform called "social media" that was making
everyone so happy that Facebook was in the game? From the
user perspective, what do you think it was that FB could
offer/deliver that was causing membership to skyrocket? Why
do you think the creators of the games you could play with your
friends while inside FB (Anyone here play FarmVille?) were so
willing to pay big money to FB to have their games on this
site? Of course, there are plenty of other things you can talk
about to explain all the hype surrounding FB... These are just
pointers Use similar conditions during Myspaces evaluation
.
Section 5
This section is all about determining how investors were (or
could have been) evaluating FB in regards to its future
potential. Remember, just because FB hadn't had the IPO yet,
doesn't mean that common stock had not already been "sold" or
used privately during those rounds of financing or an incentives
& compensation for employees.
So, this section focuses on the ways that investors can assign a
value based on what they believe to be the "future" that FB
held! There was information available at the time regarding the
revenues FB was getting from advertisers and content providers
(like the gaming companies), so investors and the general public
weren't totally in the dark. These groups of people just didn't
have access to the formal financial statements.
To help explain some of the ways to value pre-IPO companies,
check out this site:
https://www.quora.com/How-do-you-evaluate-the-potential-
value-of-stock-in-a-pre-IPO-company-with-limited-info
Other resources
Please remember that Wikipedia has solid resources on the

7. history of FB (One even contains a listing of revenues & active
users during the preIPO days!! These are just examples)
a)
https://en.wikipedia.org/wiki/Facebook
b)
https://en.wikipedia.org/wiki/History_of_Facebook
c)
https://en.wikipedia.org/wiki/Myspace
d)
https://en.wikipedia.org/wiki/Myspace#History_of_Myspace
Readings:
- Discuss the value of using break-even and payback analyses
- Weigh the pros and cons of financial valuation techniques
- Provide examples of business situations that would utilize
financial valuation techniques
- Analyze the value of various financing options
Evaluate a company’s financial status in terms of The Corporate
Life Cycle
Walsh, “The Illusion of Pension Savings”
FinancialWeb, “4 Legitimate Uses of Off-Balance Sheet
Financing”
Ostrowski, “New Lease Accounting Standards Soon to be
Released"
- Sellers Framework
- Mauboussin & Bartholdson, “Measuring the Moat”
− Boyd & Quinn, “Financial Metrics In Wide-moat Firms”
- Tsang & Xydias, “Cheapest Stocks Since 1995 Show Cash
Exceeds Market (Update5)”
− Durell, “How to Use the P/E Ratio”
− MoneyChimp, “Graham-style Formulas”
- Book: Brigham, E. & Ehrhardt, M. Financial management:
Theory & practice (14th ed.). South-Western,Cengage Learning.