Details about the fbFund
Published by Rodney Rumford September 18th, 2007 in Facebook, Facebook Applications.
In my previous post I talked about Facebook funding applications. It brought up a lot of interest and questions. So get your ducks in a row and put your best ideas forward. This is the opportunity of a lifetime for many entrepreneurs. So here are the fbFund details according to Facebook:
What is fbFund?
fbFund is a fund focused on continuing to create incentives for the development of applications on Facebook Platform by accepting applications for $25,000-$250,000 non-recourse grants from anyone interested in building their business on Facebook Platform. The grants will not come with any conditions except that the grantee use the funds to build their company on Facebook Platform.
What is the total investment in the fund?
Initially, the fund will make available $10 million in capital. This may grow over time.
Who is eligible?
Any individual or company, anywhere in the world can apply as long as they have not raised any formal venture funding.
What companies are involved?
fbFund will be administered by Facebook and funded by Accel Partners and The Founders Fund.
Will there be any equity granted in exchange for the investment?
No, Accel Partners and The Founders Fund will have the right to fund these companies first, but beyond this, no equity or debt will be associated with any grant made.
Who is participating in fbFund?
The investment committee will be comprised of Mark Zuckerberg, Facebook founder and CEO, and Chamath Palihapitiya, Facebook vice president of product marketing and operations. Facebook board members Jim Breyer (Accel Partners) and Peter Thiel (The Founders Fund) will also be part of the committee. Additionally, the fund will rely upon an advisory council that includes Reid Hoffman, founder and chairman of LinkedIn; Josh Kopelman, founder of First Round Capital; and Rajeev Motwani, professor of computer science at Stanford University and early advisor to Google.
Why are you forming this?
We are forming this fund to help grow the Facebook application ecosystem. By decreasing the barrier to start a company, we hope to entice an even larger group of people to become entrepreneurs and build a compelling business on Facebook Platform. We hope this is also a funding model that other venture capitalists will follow.
How will you decide on investments?
Anyone will be able to apply for an fbFund grant from the Facebook website. All proposals will be reviewed by the advisory council and then approved by the investment committee. The goal is to get decisions to potential grantees within the month that they apply.
How does an individual or company apply?
Initially, you can mail your business plan to platform@facebook.com. In coming weeks, we will set up an online submission process. Submissions are being accepted immediately.
What will be the criteria for selection?
We want to see the most innovative and ambitious proposals for building a business on Facebook Platform.
How long will it take to hear back from the fund?
The goal is to get a response to the applicant within 30 days of receipt.
Technorati Tags: fbfund, facebook, facebook application fund
To all developers:
This fbFund is great news for all Facebook developers whether they need the money or not. The reason is that it provides another validations that the smart money is looking to focus on facebook developers as the best avenue available today for owning a piece of the Facebook platform (short of marrying a facebook employee with tons of options).
As folks are looking at finding potential investors, we want to make sure that facebook developers have a sense of what their apps are worth. So, folks should take a look at the new Adonomics Valuation report by typing in any Facebook app’s name on the http://www.adonomics.com site and seeing what the valuation is.
For example, the app “I Am Hungry” went on sale on eBay with an initial minimum bid of $5,000.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=290162896581&_trksid=p3907.m32&_trkparms=tab=Selling
As you can see they wisely set this down to $1,000 but with a reserve. This is a much smarter way to sell an app because our Adonomics Estimated Valuation for th app is $25K.
http://adonomics.com/about/2367258038
This number could go even higher if they provide us with the data to turn this number into an Adonomics Certified Valuation.
To calculation these valuations, Adonomics has just created a new service where we use:
1. available facebook data (e.g., active users, total installs, total facebook user populuation, total facebook active users, facebook’s historical growth rate),
2. estimated and/or app provided metrics (e.g., canvas pages views, app users’ reachable via the notification API and/or profile page updates, unique visitors per month, time spent on canvas page, current CPM/CPC/CPI ad revenue levels and/or opportunities, app’s new user and active user growth rates)
3. assumptions about Facebook’s growth rate and the app’s new user growth rate extrapolated over certain forward looking time periods, in the app’s case, influenced by the size to the app’s install base compared to other apps, the age of the app on the platform compared to other apps of similar age, the category of the app, the competiveness of the app’s category, etc.
4. projections relative to ad revenue for the coming 12 months based on expected growth in CPM/CPC/CPI rates over time and with additional user targeting and then applying best practices WRT managing an app’s ad real estate (e.g., testing all ad platforms such as AdBrite, back-filling all available app real estate, creating new ad real estate that enhances app stickiness, cross-promoting opportunities, targeting an app to an attractive end user ad demographic, targeting an app to an appropriate ad sponsor)
5. other variables that relate to our own knowledge of app valuations based on apps we’ve purchased, developed, marketed via various existing ad networks and brokered to third party acquirers and/or ad sponsors.
Based on all of these data points, we come up with a valuation for the I Am Hungry app of around $25K. This is the number that we believe the app is worth assuming that the app is properly packaged for sale and the sales process
is managed in a professional way. Simply putting an app up on eBay and seeing what you get is, in our opinion, not how app developers will maximize their revenue.
Our goal at Adonomics and Altura Ventures is to help the Facebook developers win by helping them get a fair price for their apps. While we still advocate not selling an app too early, if an app developer does want to sell, then they should do so in a way that gets a value that is closer to what their app’s future revenue and profit potentials are.
We believe that the Adonomics Estimated Valuations and Adonomics Certified Valuations are a step in that direction. We will continue to enhance our methodology and formula to ensure that it ties to real world numbers. That being said, valuation is what buyer and seller agree to. So, feel free to sell your app for whatever you wish and feel free to contact us if you don’t think you are getting a fair price.
Thanks,
Lee Lorenzen
CEO, Altura Ventures — the first Facebook-only VC fund
Hi Rodney,
Thank you for your post detailing the launch of the fbFund. While you indicated that a more formal submission process if forthcoming, I’m curious to know what type of information is presently expected with application submissions. Any thoughts?
Thanks for your help,
Scott Himmel
Here is the video of
Michael Arrington interviewing Mark Zuckerberg, including the fbFund announcement
I am interested in finding out how to get along an idea. Who do I contact? Anyone know? Thanks!