Capital Chaos

 It was confirmed that Slide finalized a deal for $50M lead by Wall Street behemoths Fidelity and T-Rowe Price.  It is reported that Allen & Co helped craft the deal.  Aside from the $550M valuation the company is reportedly worth, it is the fourth round for the company that took in $20M back in November of 2006 in a Series C (participants in that round included BlueRun Ventures, Khosla Ventures, Mayfield Fund and The Founder’s Fund).  Slide, which is purely a widget and Facebook app has gotten a lot of press from coverage in the NY Times.  The company allows users to display photos, write messages on your friends pages, send virtual “pokes” - all very important things to accomplish in a day.  Use of capital is to expand the staff, keep up with user growth and stay ahead of the competition from rivals like RockYou.

What is most interesting about the investment is the valuation given to Slide.  Coming on the heels of Microsoft investing in Facebook at a valuation of $15B, the Facebook Effect seems to be in full swing. There are a lot of investors trying to capitalize on applications being developed in and around Facebook in the hopes that if Facebook becomes the next Google stock high flier, their investment will be effected as well thus just increasing the valuation.  We are currently preparing a profile of Facebook app companies to show not only the money raised for them but who is funding them and what we believe the expectations are.

Some info on Slide - The company was founded by Max Levchin who was the co-founder of and former CTO of PayPal.  He is also credited with having helped found Yelp.

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 Fidelity isnt’ the typical investor into companies like Slide (nor is T-Rowe Price) but given that the deal was brokered by Allen & Co. it shouldn’t be too surprising.  These are two very big funds that could be attempting to diversify their typical investments by attempting to take advantage of the very high valuations placed on Facebook applications.  Yet, I am quite perplexed at the deal.  Having pitched Allen & Co in a previous life (There truly has never been a better group to pitch than those guys), I can see how they are trying to diversify the field.  Herb Allen is highly regarded and highly respected for his vision in media and technology and my sense is that he sees something in Slide which isn’t available to the general public just yet.  Stay tuned for this one.