Battery Ventures’ mistake on Facebook

There’s a notable piece at Boston.com today about how Battery Ventures partner Scott Tobin (pictured left) decided not to invest in Facebook when Mark Zuckerberg pitched him three years ago in Boston.

Tension between the firm’s East and West Coast offices contributed to the firm’s rejection of the Facebook founder (Battery, by the way, has since been quite open about the division, and says it has cleared things up). However, Facebook has become a billion dollar company, on paper (of VC termsheets) at least. So when Boston-based Tobin says his pass “may turn out to have been a mistake,” it’s a huge understatement.

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We’d agree with Accel’s Jim Breyer, who also comments in the piece.

Breyer, who ended up backing Zuckerberg, argues Facebook became as big as it did only by coming out to the valley. Breyer cites the execs from area companies like Yahoo, eBay and Google who have helped Facebook. Also, early employee Sean Parker, also out here, helped Zuckerberg navigate the VC world, and cut some good deals.

Tobin responds to Breyer’s comments, saying: “Folks in the Valley are incredibly geo-centric to a point of snobbery.” That’s not quite fair. Breyer has been on the record often over the years (see our coverage), saying the Valleyites were too self-centric during the last boom, “smoking their own exhaust fumes.” However, that’s since changed: Silicon Valley’s Accel has moved to China and Europe, as have other valley firms. In fact, Battery, led by its East Coast office, has been relatively slow to move abroad. It’s hard to argue the West is more self-centric or snobby than the East Coast.

The story also notes that early Facebook investor Peter Thiel invested $500,000 of his own money, in return for 10 percent of the company (valuing the company at $5M). That’s a steal, but it doesn’t match up with the rest of the story, which says Zuckerberg was demanding better terms (valuing the company at $15M when he was back in Boston).