October 2007: Microsoft buys 1.6% of Facebook for a record amount of 240 million dollars. What was the path that brought a small university network to becoming a large business with over 600 employees?

Not everyone may know that the history of Facebook, originally  “the facebook.com, is closely linked to the founder of Napster: Sean Parker. The fate of the social network, indeed, changed when , soon after the launching of the portal in February 2004, Zuckerberg was contacted by Parker who joined the company,  becoming its President. The two met in New York and collaborated for over a year.
After only a few months Mr. Napster, thanks to his acquaintances, obtained a meeting in San Francisco with the co-founder of PayPal Peter Thiel, who forked out 500 thousand dollars in exchange for 7% of the company. Part of that money (200.000$)  was invested by Parker, who in the meantime had taken the reigns of the marketing department, for the purchase of the “Facebook.com” domain.

Since that first payment it has been all downhill for Facebook with money pouring down over Zuckerberg, despite the breaking off of the partnership with Parker in 2005. In that year, Jim Breyer of Accel Partners, signed a check for 12.7 million dollars,  establishing himself on the Board of Directors, and obtaining soon afterwards other payments from Greylock and Meritech Capital Partners for a total of 27.5 million dollars.

The following table from Tradevibes, the portal specialized in the collection of data related to internet startups, provides a detailed account of Facebook financing.

 What this list clearly shows is that in the United States, when there is a promising idea, venture capital associations invest in  these projects acquiring company shares and providing the companies with liquidity until startup. The obtained funds allow to upgrade which in turn reels in other investors, paving the way to success.

How many opportunities are there for  small Italian companies that operate on the Internet to find investors willing to finance ambitious projects? Very few. If you want to be optimistic.
Too often, companies in the “Belpaese” are not able to impose themselves on the international market because they are forced to be self-financing.

In this regard, during a panel discussion on the issue of sustainability of services and the decline in the advertisement  earnings, at the BlogFest of Riva del Garda, an event dedicated to the Italian blogosphere, Paolo Ainio (founder of Virgilio and Banzai) said:
‘It is necessary to find alternative sources  to support the cost of Internet services. In addition to the problem of the sharp decline in the value of CPM for publishers, in Italy it has always been difficult for small companies with good projects, to finding startup funding.”

How long will  it be until Italian entrepreneurs start to focus on the web? When will investors realize that the Internet has upset the habits of the entire world and that the IT industry is among the most flourishing and expanding? The answers to these questions are not for us to answer but the crisis facing our country today is undoubtedly the effect of  our political leaders who are too old and not particularly in tune with the younger generations. The web is rapidly evolving  and we hope that soon they will notice and  begin to act  to bring out all the promising projects which Italy is  certainly not short of.

Ferdinando Cirillo
Davide Nunziante
Press Office Ciaopeople

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