Bay Partners, a Silicon Valley venture capital fund, announced today the launch of AppFactory, a new seed program that will fund developers creating Facebook applications. The program, headed by Salil Deshpande and Angela Strange, aims to help entrepreneurs monetize Facebook applications and will make up to 50 investments ranging from $25,000 to $250,000. Bay Partners will also provide additional technical and business assistance.
The question on everyone’s minds: is it so wise for Bay Partners to put all their eggs in one basket? True, Facebook’s new F8 platform has been hugely popular since its release in May; Deshpande told TechCrunch that 40,000 developers have requested keys from Facebook to create applications, and there are already over 1,600 on Facebook. However, as Read/WriteWeb points out, Bay Partners is taking a “significant risk,” considering that thus far, no application developer has demonstrated a successful F8 business model.
Bay Partners, however, thinks that Facebook’s “Social Operating System” will spawn a new economy. Said Deshpande to Ajaxian:
We will definitely see the open Facebook platform resulting in real, valuable applications. We believe that the Facebook apps of the future will be deep and sophisticated and will strike the right balance between adding value to the Facebook fabric, and having value independent of Facebook…
… Incorrect conclusions are being drawn from the unmonetizability of some apps that have spread fast on Facebook to date. Some apps are like jokes that get forwarded around by e-mail — and will always be unmonetizable. But meaningful apps will be monetizable just as meaningful web 2.0 websites are monetizable. We are interested in backing entrepreneurs that will be imaginative about what types of applications can be built on Facebook’s Social OS.
Due to the relatively new and unprecedented nature of the social network platform along with these applications, what exactly holds in store for the future is anyone’s guess. It might just work, or we just might all be buying into the hype, as Om Malik suggests over at GigaOM:
Facebook, despite the cleverness of its recent platform strategy, is still a start-up, and a funding vehicle focused entirely on its ecosystem seems a bit rash. There is still a fog around these Facebook apps-as-businesses. Advertising on social networks is still a hit-and-miss phenomenon, still heavily reliant on banner advertising more than anything else.