Funding News: Friendster

February 28th, 2006 • Business, Entrepreneurship + Startups, Technology, Venture Capital

Friendster, the company which spurned a $30 million acquisition bid for $13 million in funding from Kleiner Perkins (nice new site BTW!), has landed some more cash. Their last round of funding was back in 2003 so they’ve been at it for quite some time now. No word (yet) about who the funders were or how much the funding was for. Based on how their business has been doing though, I suspect (but have no proof, mind you) it was a down round for the company. Pretty unfortunate story since they had word-of-mouth going for them and basically defined the category. I think their downfall was that they lacked a really good ongoing story as well as a clear path to profitability.

But when Friendster got funded, you could tell something was going to go awry with someone. In the social networking space there was a surge of venture deals between Friendster (Kleiner Perkins, Benchmark, Battery Ventures - $13 million), Spoke (DCM Capital - $11.7 million), and LinkedIn (Sequoia, Greylock - $14.7 million). To me it just seemed like too much money (those three were $39.4 million total and I’m sure there were others I missed) in just too small of a timeframe ($28.4 million in less than a month timeframe with another $10 million less than a year later). That kind of frenzy usually doesn’t bode well.

Oh yeah, you probably won’t read this news anywhere else for at least a few days. So you got the straight scoop. Albeit without any real details like numbers or who did the round. But still, you got to know first!

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