US: Facebook backers create S$15m fund for start-ups

The fbFund gives grants to finance innovative ideas for Facebook applications

The Straits Times
Tuesday, September 18, 2007

SAN FRANCISCO --- ONLINE social networking phenomenon Facebook said on Monday its backers have created an unusual US$10 million (S$15.2 million) fund to dole out grants to start-ups with ideas for innovative Facebook applications.

Facebook is working with its primary venture backers, Accel Capital and The Founders Fund, to create a way for people with new ideas to receive an initial funding grant of US$25,000 to US$250,000 that does not require the entrepreneur to give up any equity in the business they create, as venture capital does.

'We are looking for innovative and disruptive things,' Mark Zuckerberg said of projects the grants might fund, in a keynote presentation at TechCrunch 40, a conference showcasing Web start-ups taking place this week in San Francisco.

Projects need not be entirely profit-focused but will be judged based on their overall contribution to Facebook.

Non-profit projects could receive funding, officials said.

Rather than seeking to overturn the classic venture capital model, which provides up-front financing to start-ups in return for hefty equity stakes down the road, Facebook hopes to create a more patient model that other venture financiers can follow.

By offering grants rather than venture capital-style investments with strings attached, the fbFund (fb is short for Facebook) entrepreneurs can focus on developing ideas instead of worrying over the dilution that comes from venture funding.

The grants have few conditions except that the grantee use the funds to build their company on Facebook Platform.

The Palo Alto, California-based site has seen its number of active users spike by 70 per cent to 41 million members in the four months since it opened up the social networking site to allow independent developers to build programmes inside it.

Date Posted: 9/18/2007