The new Face(book) of Corporate Venturing

Facebook announced their fbFund to at the TechCrunch40 conference earlier this week. The fund will provide between $25k-$250k to developers building applications on Facebook’s platform. This is very similar to Google Gadget Ventures, who launched earlier this year offering $10k-$100k.

Facebook are also rumored to be gearing up to provide hosting for developers as well.

The net effect of Google and Facebook is a wake up call for VCs. Accel and the Founders Fund are behind Facebook and the fbFund, so creating a mini-ecosystem to support an existing investment makes plenty of sense (it’s almost corporate venturing).

What’s really clear, though, is the real cost of bringing new companies to market- peanuts. Most entrepreneurs can scrape together $25k or beg, borrow or steal time/input/equipment to get to an equivalent of $50k.

As the price continues to drop will we see a shift to this new breed of corporate venture?

2 thoughts on “The new Face(book) of Corporate Venturing

  1. 1000 ventures talk about “The most successful companies are those that have developed aggressive venture strategies and have made ventures critical components of their strategic and operating success. For today’s corporations, traditional internal expansions, efficiency improvements and “synergistic” acquisitions are no longer sufficient sources of growth in most industry segments that had grown crowded and hypercompetitive. The new challenge is to search for emerging “white space” opportunities, “new-business creations that would meet the unmet, unserved needs of customers in emerging markets.”

    I’m not sure how they would be measuring the ROI but if they can allocate someone from top management to develop and implement these strategies through funding. I’m guessing these are spin-outs and woudl remain tied to the company that helps fund them, unless the funding is from multiple corporations. Operational ties could include shared professional and administrative services as well as leadership/marketing support.

    Facebook could have been doing this earlier but it wanted to not hold back and let the markets and innovation take their natural course . Although having a fund woudln’t necessarily mean that facebook wuold be putting limitations and siphoning funds from these companies but its better to not even show a sign of such hindrance. Now that the market is sufficiently saturated it makes sense to have a fund focused on these specific ventures especially because facebook could contribute the intellectual capital needed to truly help these companies realize growth.

    In conclusion this could be the new breed once we can have an open internet platform along with progression towards the semantic web, because the cost is cheaper and the system just needs to create incentive (like the facebook platform has) to have people pursuing ventures. It’s almost like crowdsourcing something and the cost companies are willing to pay doesn’t have to be static, there could be downbidding (depending on the difficulty of the problem/issue/innovation and the number of people (or AI systems) willing to do it.

    -Azam (http://www.revupnet.com)

  2. Actually i’m really sorry. What I wrote was totally off. The FB fund is like a scholarship and to support this eco system is a wise strategy. I apologize for misinterpreting.

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