Facebook

Venture capital (VC) investments have a significant impact on the global economy, particularly in technology, where many startups grow into dominant global corporations. One of the most notable examples of venture capital success is Facebook (now Meta Platforms), which has provided massive returns for its early investors.

Here’s a deeper look into the early venture capital investment in Facebook, covering the investment process, the companies and individuals involved, the structure of the deal, and the remarkable growth trajectory of the company.

The Early Days of Facebook (2004)

The Birth of Facebook:

• Founder: Mark Zuckerberg, along with co-founders Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes, created Facebook (then called “Thefacebook”) in February 2004.
• Initial Purpose: The platform was initially launched as a social networking website for Harvard University students. It soon expanded to other Ivy League schools and later to any college or university student, rapidly gaining traction.

Seed Funding Stage (2004)

• Funding Need: Facebook required initial capital to expand its platform, improve infrastructure, and market the platform to universities and beyond.
• First Seed Investor: In 2004, Peter Thiel, co-founder of PayPal and a well-known venture capitalist, made a $500,000 investment in Facebook. This early seed funding played a crucial role in setting the stage for future growth.

Accel Partners: The Key Venture Capital Firm

The Investment by Accel Partners (2005)

• Date of Investment: In 2005, Facebook raised a $12.7 million investment round led by Accel Partners, one of Silicon Valley’s leading venture capital firms.
  
  • Investment Round: Series A funding round
  • Lead Investors: Jim Breyer from Accel Partners, who became one of Facebook’s early key investors, helped structure the investment deal.
  • Amount: Accel Partners and other investors, including Greylock Partners, invested $12.7 million in exchange for approximately 15% equity in the company.

Details of the Investment:

• Valuation: At the time of the Series A investment in 2005, Facebook was valued at approximately $98 million. The $12.7 million investment gave Accel and other investors a 15% stake in the company.
  
  • Pre-Money Valuation: $98 million
  • Post-Money Valuation: Approximately $110 million after the investment.
• Ownership and Control: Despite Accel Partners’ investment, Mark Zuckerberg and the founding team retained control of the company, with Zuckerberg holding a majority of the voting shares.

Strategic Role of Accel Partners:

• Jim Breyer’s Influence: As a partner at Accel, Jim Breyer played an instrumental role in guiding Facebook through its early days. Breyer introduced Facebook to other major Silicon Valley investors and guided Zuckerberg and the founding team in navigating the company’s rapid growth.
• Long-Term Guidance: Accel’s involvement wasn’t limited to just providing capital; they also helped refine Facebook’s business model and recruited key early hires, which laid the foundation for the company’s scaling efforts.

Growth and Additional Funding Rounds (2006-2012)

Series B and Beyond

• 2006: Facebook’s growth continued exponentially, and in 2006, Facebook closed another round of funding, this time from Greylock Partners and Meritech Capital Partners. The investment size was $27.5 million, and Facebook’s valuation rose to $500 million.
  
  • Valuation at this point: $500 million
  • Investor Impact: Accel Partners and Jim Breyer remained key stakeholders, but new investors began entering the scene as the company’s prospects expanded.

2007 – Investment from Microsoft

• In 2007, Microsoft invested $240 million in exchange for a 1.6% stake in Facebook. This was a major turning point in the company’s history, marking Facebook as a significant player in the social media landscape.
  
  • Valuation Post-Microsoft Investment: Microsoft’s investment valued Facebook at about $15 billion, a massive increase from the previous year.

2008 – The Zuckerbergs and Russian Investment

• In 2008, Facebook was facing operational challenges, and a significant deal took place with DST Global, a Russian investment firm. DST, led by Yuri Milner, invested in Facebook in a round that valued the company at $15 billion.
  
  • Yuri Milner: Milner’s investment was crucial in expanding Facebook’s reach internationally. He later became one of Facebook’s most significant and vocal supporters.

Series D and 2012 IPO

• 2011-2012: Facebook raised another round of $1 billion in 2011, marking a valuation of over $50 billion. This round included major institutional investors, including Goldman Sachs and Microsoft, and helped set the stage for Facebook’s initial public offering (IPO).
• Facebook IPO: In May 2012, Facebook went public with an IPO price of $38 per share, raising $16 billion and valuing the company at $104 billion.
  
  • IPO Impact: Investors who bought in during earlier funding rounds (such as Accel Partners and Jim Breyer) had witnessed substantial growth in their investment, with Facebook’s stock price increasing significantly in the years following the IPO.

The Return on Investment (ROI) for Early Investors

• Investment Size: $12.7 million in 2005 (Series A)
• Equity Stake: 15% at the time of the Series A investment
• IPO Valuation: Facebook’s IPO valuation in 2012 was $104 billion, which meant that the value of Accel Partners’ stake in Facebook was approximately $15.6 billion (15% of $104 billion).
• Final Outcome for Accel:
  
  • Initial Investment Return: From the initial $12.7 million investment, Accel’s stake of 15% grew to $15.6 billion, providing an over 1,200x return on the initial capital.
  • Annualized Return: Accel’s investment in Facebook delivered an annualized return of around 100% over a 7-year period.

Other Notable VC Investors

• Peter Thiel (PayPal co-founder) invested $500,000 in 2004 and, by 2012, his stake was worth $1 billion.
• Mark Zuckerberg: Although a co-founder, Zuckerberg’s stake in the company remained the largest, which further enriched his wealth as Facebook grew.

Facebook’s Post-IPO Growth (2012-2025)

After its IPO, Facebook (now Meta Platforms) continued to grow rapidly, leading to significant returns for early investors who held on to their shares. Some key milestones after the IPO include:

Rebranding to Meta (2021)

• In October 2021, Facebook rebranded as Meta Platforms, shifting its focus toward the metaverse and augmented reality. This strategic pivot was aimed at positioning the company for future growth beyond social media.

Growth in Revenues and Market Capitalization

• As of March 2025, Meta’s market capitalization stands at around $750 billion. The company continues to be one of the largest and most profitable tech companies globally, dominating social media and expanding into the virtual reality space.
• Meta’s Revenue: In 2024, Meta generated $130 billion in revenue, with most of it coming from advertising across its platforms, including Facebook, Instagram, and WhatsApp.

Impact on Early Investors

• Investors who bought into Facebook at its IPO or during its earlier rounds (including Accel Partners, Peter Thiel, and other venture capital firms) continue to see immense returns.
  
  • Accel’s $12.7 million investment in 2005 turned into a multi-billion-dollar return by 2025, far outpacing other investment opportunities.

Conclusion: Venture Capital’s Role in Facebook’s Success

The story of Facebook’s venture capital investment is one of the most significant success stories in the tech industry. The involvement of Accel Partners, Peter Thiel, and other key venture capitalists was critical in supporting Facebook during its early stages of growth, providing not only capital but also strategic advice and mentorship. The partnerships between Facebook’s founders and investors set the stage for what would become one of the largest and most influential companies in the world.

For venture capitalists, Facebook remains a prime example of how early-stage investments in high-growth technology companies can yield extraordinary returns. The 1000x+ return on investments made in the early 2000s exemplifies the potential for outsized profits when backing transformative startups with strong leadership and massive market potential.