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fbFund: VCs Declare Profits Passe?

Leaving aside the Facebook aspect -- which is admittedly hard, given that is its raison-d'etre -- I'm kinda fond of the new fbFund launched by Facebook, in conjunction with Accel and Founders Fund.

First, the gist: It's a $10m grants-only fund that will dole out amounts ranging from $25-$250,000 to worthies who promise to build Facebook apps. Founders Fund and Accel will get the right of first financing refusal on anything coming out of the effort.

What do I like? The following:

• It's obvious why Facebook is doing it
• It keeps small pre-seed "investments" off startups' balance sheets
• It avoids the early valuation and convertible note traps in early-stage companies
  

Sure, there's lots to worry about. It will drive more Facebook froth; it lowers the funding bar; and it opens the doors to jokes about Web 2.0 venture funds finally abandoning all pretense of profits, etc. etc. Right, right, and right.

Nevertheless, leaving aside the Facebook angle -- a subject about which I am weary beyond words -- I like the idea of a grant-based fund filling a gap in the pre-seed cycle. People might consider where else this approach would be applicable, and more likely to lead to higher returns...
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