Reuters) - As Wall
Street eagerly awaits signs that Internet sensation Facebook will offer
shares to the public, the venture capitalists that prowl California's
Silicon Valley are keeping close tabs on another hot commodity: the
employees leaving Facebook.
A handful of start-up companies founded by
Facebook alumni are attracting attention and generating a good amount of
buzz within venture circles, where competition is fierce to get a stake
in the web's next hit product.
On
Monday, Quora, a start-up founded by two ex-Facebook employees,
including former Chief Technology Officer Adam D'Angelo, raised a Series
A round of funding from Benchmark Capital that the technology blog
TechCrunch said valued the company at $86 million, citing an unnamed
source.
Benchmark partner and
former Facebook product management vice president Matt Cohler will sit
on Quora's board.
Quora, which
operates out of a small, college-dorm-like suite in downtown Palo Alto,
California, with cardboard crates of water-bottles stacked waist-high
against the walls, had not planned to raise money so early, said
D'Angelo, who is the CEO of Quora.
"We
weren't really shopping it around, but there was a lot of interest"
from VCs, he said in a phone interview with Reuters after the
announcement of the funding on Monday. The company was started in April
2009, and the product which was launched in January 2010, can currently
be used only by people who have received a special invitation.
D'Angelo declined to comment on the
financial terms of the deal, but said the funding will help Quora hire
more staff and focus on a wider set of technical challenges underlying
the product - an online question and answer service based on people's
social connections.
The
proliferation of start-ups with Facebook veterans, and the investor
interest in them, follows a time-tested Silicon Valley pattern in which
tech superstars from Google Inc to Fairchild Semiconductor have spawned
innovative start-up companies, said Nick Sturiale, a general partner at
JAFCO Ventures.
"Any entrepreneur
spinning out of Facebook is going to get attention," said Sturiale.
"They're at the vanguard of how the Web is emerging."
Facebook, which counts 400 million active
users and is the world's No. 1 Internet social network, has yet to
announce any plans for an initial public offering -- the traditional
payday that allows early company insiders to cash-out and move on to new
projects.
But the active
secondary market for Facebook shares -- including more than $100 million
in officially-sanctioned stock purchases of employee shares by Facebook
investor Digital Sky Technologies last year -- has allowed Facebook
employees to decamp at an earlier stage, say some VCs.
"We've seen loads of people leave Google
and now we're seeing loads of people leave Facebook. Either because
they're vested, or because they think the company's gotten too big,"
said Spark Capital's Todd Dagres.
Dagres
said he's looking at several start-ups founded by ex-Facebook
employees, but he notes that a Facebook connection is not enough.
"You definitely pay attention if somebody
is leaving Google or Facebook. But then you've got to make sure that
they really have built a track record, that they didn't just work
there," said Dagres.
A number of
Facebook-related start-ups have already passed muster. Asana, whose
founders include Facebook co-founder Dustin Moskovitz, raised $9 million
in December from Benchmark Capital and Andreessen-Horowitz. Cloudera,
which features former Facebook, Google, Yahoo Inc and Oracle Corp
veterans on its management team, raised $11 million from Greylock
Partners and Accel Partners in two separate rounds of funding last year.
Meanwhile, Path, a secretive project led
by former Facebook employee Dave Morin and Shawn Fanning, the creator of
music sharing service Napster, has piqued a lot of interest in tech
circles though it's unclear if the company is looking to raise money.
Some entrepreneurs, like former Facebook
director of international business development Net Jacobsson, say
there's no overwhelming pressure to raise capital right away, thanks to
the low cost with which Web start-ups can be created these days.
Jacobsson, who advised social gaming firm
Crowdstar after leaving Facebook in May 2009, recently set up his own
social game start-up dubbed PlayHopper. The game development is
primarily taking place in China, he said, and the goal is to generate
revenue as soon as the first game is released.
Several VC firms have contacted him to
check-in on his new project and in some cases to inquire about investing
in the company, said Jacobsson, who noted that he was still thinking
over whether he needed to take money from outside investors.
"When it comes to VCs, it's like a
marriage," said Jacobsson. "A marriage you can get out of, but it's very
difficult to disconnect yourself from a bad VC marriage."