Facebook raised $37M, but not under duress

The fast growing social network Facebook confirmed today that it has raised more than $37 million in venture capital to date (something already known), but that it did not do so under duress.

The company was responding to a Times of London story that suggested Facebook was desperately in need of more servers last year to manage its growth, and that it was forced to sell a ten percent stake to Greylock Partners — in order to get cash. Greylock partner David Sze, a board member told VentureBeat the firm does not own ten percent, and that the firm’s investment last year did not come because of a need for servers. When asked what parts to the Times report were inaccurate, he said “all of it,” calling the paper’s reporting “amazing.”

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He continued: “A site like Facebook is always adding servers to support its growth. But there certainly was no panic reaction to run for funding as the article implies. I wish there had been! It would have made my life easier in doing the deal!”

We covered Greylock’s investment last year. Before Greylock’s lead of that $25 million round, Facebook had raised $12.7 million in a round led by Accel Partners.

Going forward, we’ll try to avoid dispelling erroneous reports by other publications. This one seemed particularly nasty, however, calling Facebook’s server problem a “major stuff up,” citing two anonymous sources. It is relevant only in that Facebook continues to face challenges keeping up with demand from outside developers to access its platform.