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…