Rafe Needleman @ CNet News.com writes:

This morning, venture capital firm Bay Partners announced that it is kicking off AppFactory, a special funding program for Facebook developers.

Bay is a typical Silicon Valley venture firm, operating three large funds. AppFactory will draw resources from the latest, a $300 million pile of cash and commitments that Bay will funnel, in chunks as small as $25,000, to promising Facebook developers.

Unlike its larger and more traditional technology investments, Bay will not run its AppFactory candidates through weeks or months of due diligence. At the funding levels it’s thinking about, it’s not worth the effort. In part, “we’ll rely on instinct,” Bay’s Salil Deshpande told me.

AppFactory will also offer Facebook developers easy access to people its connected with at supporting companies like Amazon, whose Amazon Web Services server farm can be employed to run Facebook apps. Bay also hopes its Appfactory developers will form a community and help each other out.

Bay’s move is smart. There’s no question that Facebook is a very important Web platform. While it’s not like the Web itself, which is open to all comers and not controlled by any one company, one could compare the Facebook platform to eBay. It’s a platform that’s easy to build businesses on.

The exposure, of course, is that Facebook will not be run as a platform. “A lot of companies get it wrong,” Desphande told me. “Facebook is just getting started. They are going to have to make the investment and behave properly.” However, if Facebook gets it right–and indications are, so far, that it will–apps on the platform can take easy advantage of the built-in, interconnected user base.

If you’re got a killer idea for a Facebook app, and skills to begin development on it, check out baypartners.com/appfactory and apply.

Tags: AppFactory

The Deal.com writes:

After a few months in the shadows, Bay Partners has decided to publicize its seed fund investment activities and focus its sub-$250,000 investments on companies that have developed applications for Facebook’s platform. This means any startup that has integrated its own web service or a related service into the Facebook web site in order to make it available to Facebook’s 27 millions users.

It’s a smart marketing ploy by Bay. Taking a page from Charles River Ventures’ QuickStart program, Bay Partners had already made a handful of seed investments designed to boost its deal flow of Web 2.0 startups. But, its announcement today that it will only fund startups that have developed Facebook applications differentiates the firm from CRV and gives it a fresher look.

In reality though, the two seed programs will look at very similar startups since most consumer Internet companies would benefit from the attention that could be garnered from creating a popular Facebook application.

Tags: AppFactory

Jessica Guynn of The San Francisco Chronicle writes:

To paraphrase pop artist Prince, everyone is gathering to celebrate this thing called Facebook.

In the latest sign of the social network’s rising star, Silicon Valley venture capital fund Bay Partners has earmarked millions of dollars for investments in startups creating applications for Facebook.

The new program, called AppFactory, launched today to give entrepreneurs the opportunity to raise small amounts of capital in a short span of time, as little as a few days. The investment would be to develop new features for Facebook.

Facebook created a stir in May when it opened its online platform to anyone who wants to build applications for it. Tens of thousands are jumping at the chance to do just that, eager to get even a small piece of the Facebook action. AppFactory will be making up to 50 investments ranging from $25,000 to $250,000. In addition to the money, Bay Partners will offer entrepreneurs technical and business resources.

The reason for the excitement: Facebook could become the hottest initial public offering since Google. Its CEO Mark Zuckerberg has said the “social graph,” the web of personal connections that drives Facebook, is the next big Web evolution.

Salil Deshpande, the man at Bay Partners who will run the program along with senior associate Angela Strange, calls it the “social operating system.”

Bay Partners

Salil Deshpande of Bay Partners is the venture capitalist heading up a new program to invest money in startups creating applications for Facebook

Is there money to be made on Facebook? Time will tell. It could be a very intriguing play for some entrepreneurs to build a business on Facebook which has 29 million users and growing.

“We will help entrepreneurs discover, build, and monetize them,” Deshpande said in a statement.

Interested? E-mail appfactory@baypartners.com.

As for one of our favorite Facebook applications, check out Booze Mail from the folks at Renkoo. The idea is simple. Everyone loves a tasty beverage, whether it’s soda, juice or mixed drinks. And we all love to share them with our friends. Now you can send your friends a drink or a round of drinks.

The cool thing about is that Booze Mail makes the connection between the online world and the offline world. Renkoo cofounder Adam Rifkin is fond of quoting Tim Berners-Lee who likes to quote Robert Cailliau in declaring that there’s: “No such thing as a virtual beer.”

Meaning, Rifkin says, that people build more meaningful (and certainly more spirited) relationships while consuming libations in the presence of others. To do so on a regular basis just deepens the bond of friendship. (You can drink heavily in the solitude and privacy of your own home, but there’s another word for that).

But what if you could have a virtual beer that doubled as an offer to get together and have a real beer? That was the idea Rifkin dreamed up with Renkoo cofounder Joyce Park.

Adam Rifkin

Renkoo cofounder Adam Rifkin getting his drink on

“We asked ourselves, ‘What do the Facebook users really care about?’ Great books? Saving the world? Curing cancer? Or booze? And let’s face it, helping people get their drink on is Renkoo’s mission statement or at least a big part of it,” Rifkin said. “So then we decided to focus on the drinks that had really cute, recognizable glasses and came up with a great name and thus Booze Mail was born.”

This wasn’t a far-fetched idea for Renkoo, which got its start two years ago. After all, Renkoo is a service which helps groups of people get together and, in Park’s words, get their drink on. “Coffee,” “drinks,” and “meeting” quickly became three of the most popular get-togethers that friends were using Renkoo to coordinate.

We think Booze Mail is worth toasting, as is the Renkoo motto: “We truly believe that what separates people from computers are the services that help separate people from their computers.” Apparently we are not alone. Booze Mail is catching on faster than a Charles Bukowski buzz.

Update: Something for the Renkoo folks to toast: Booze Mail just hit 180k installations and 2 million drinks served.

Tags: AppFactory

Richard Waters at Financial Times writes:

Two further signs of just how far the lure of social networking is prompting venture capitalists to loosen the purse strings:

Ning, Marc Andreessen’s social networking platform, has just raised $44m from mutual fund group Legg Mason and others (are mutual fund companies getting into social networking now?) Andreessen had been following the low-key style favoured by the early Web 2.0 crowd but has now decided the time has come to push the pedal to the metal.

According to this note on his blog, Andreessen had been staying “lean and focused” but now it’s time for phase two: scaling up the platform, investing in new features and “platform evangelism and support programs.” Just in case you thought that meant Andreesen is ready to swing for the fences, dotcom-style, he adds that in other respects “we plan on staying as lean and focused as we possibly can.” Hm.

Meanwhile Bay Partners, a Silicon Valley venture capital firm, says it wants to invest money in companies that are writing applications to run on the Facebook platform. The social networking site’s platform strategy has been one of the Valley’s favourite talking points since it was officially launched in May. First it was hailed as an end-run around MySpace, a way to draw more innovation, and eventually users, to the underdog network. That was followed by an inevitable, if rather rapid, backlash as the tech blogs started to question whether Facebook’s platform is all it’s cracked up to be (we blogged about what the blogs were saying here.)

In reality, it’s too early to assess the Facebook strategy because (a) it’s not clear what the business model for the apps will be and (b) how big a slice of the cake Facebook will want to keep for itself when/if the dollars start to flow. Interesting, though, that Bay Partners wants to invest $25,000-250,000 in apps to run on the network, no business model required - only “reasonable theories about monetisation.”

Not that this gets us back to the Sock Puppet days quite yet. Still, it’s another step along the road.

Tags: AppFactory

Dan Farber of ZDNet writes:

At least one venture capitalist is seeing gold in the Facebook Platform. Bay Partners created a new funding program, AppFactory, for Facebook Platform developers. This is venture capital with a small “v”–focusing on investments of $25,000 to $250,000 with an expedited approval process.

The goldmine for developers and Bay Partners to exploit is the 29 million or so members of the Facebook community and the development platform, which already has more than 1,400 applications. Among the top applications are iLike, which lets you personalize music selections based on your Facebook music and friends, and Slide, which lets you integrate slide shows within Facebook. At this point, monetization of Facebook apps is lagging, but Bay Partners hopes to stimulate the Facebook micro-economy.

Salil Deshpande, a partner at Bay Partners dubbed Facebook the “Social Operating System,” and said that it can lead to a “a new economy which includes a marketplace of applications that are optimally designed for that platform and its user base.” He is also betting that Facebook’s rapid growth and success will force other social networks to align their APIs with Facebook’s.

The entrance exam for AppFactory candidates is straightforward. Bay Partners asked for a two-page or less disposition of the following items:

* A brief bio of you and your team (if applicable)

* Your vision for your Facebook Application

* How your idea adds value to the user

* Your competitive advantage

* Why it’s more appropriate for your app to leverage Facebook’s platform, rather than take a destination-site approach

* Your ideas for how your app could potentially be monetized

* Your ideas for how your app will become viral

* Your capital requirements and use of proceeds

See also the blogosphere swarm on the AppFactory announcement

At the other end of the spectrum Marc Andreessen announced that after funding his social networking company Ning personally and through friends, he took in a series C round of $44 million. Ning offers a white label solution for people to build their own social networks, and so far more than 70,000 have done so. Ning makes its money selling ads on the sites.

Banking $44 million in new money, Andreessen and his co-founder Gina Bianchini must has something up their sleeves that they haven’t disclosed yet. See the blogosphere swarm on this one as well on TechMeme.

Tags: AppFactory

By Owen Thomas of ValleyWag

Bay Partners, a Silicon Valley venture capital firm, is cutting small checks to startups developing apps on Facebook’s F8 platform, VentureBeat reports. Sure, Bay is opportunistically trying to ride on top of the frenzy for apps written specifically for Facebook’s user base of 29 million. But Bay’s initiative, called AppFactory, is small potatoes compared to what we think Facebook backer Jim Breyer, managing partner at venture capital firm Accel Partners, might be up to.We’re told that Accel is looking at investing in Facebook app developers. Naturally. Breyer’s $13 million investment in Facebook two years ago was seen by some as a sign of a building bubble. Now with estimates of Facebook’s value ranging in the billions of dollars, of course, rival VCs like Bay Partners are jealous.

But Breyer can’t possibly be content with just one home-run investment. It stands to reason that he wants to build a keiretsu — a network of startups which partner with each other to build their businesses and boost their common investor’s returns. John Doerr and his colleagues at Kleiner Perkins did this in the 1990s, with AOL, Netscape, Amazon.com, Intuit, Excite; Michael Moritz, at Sequoia, likewise, parlayed his firm’s investments in Cisco, Yahoo, and Google into other moneymakers. Breyer’s only real ’90s hit, meanwhile, was RealNetworks — a thin reed on which to lay a keiretsu.

You have to admire the evil genius of the plan, if true: Breyer, a Facebook board member, can cherry-pick only the most successful app developers before rival venture capitalists have even heard of them. And Breyer, too, can guarantee favored startups something no one else can — protection from an abrupt decision by Facebook to block or cripple their apps. That power — implied, never spoken — also would bear a concomitant threat: Startups who don’t play along with Accel, and accept the valuation they’re given, may suddenly find Facebook an unfriendly place to write software.

So, Facebook developers, report in — is the rumor true? Has anyone gotten an offer they can’t refuse? A hard sell from Accel? Drop us a word.

Tags: AppFactory

By John Cook of The Seattle Post-Intelligencer.

Tags: AppFactory

Michael Arrington of TechCrunch wrote the following story, but got an important detail wrong — the Facebook investment initiative is a program being run out of our $300M 11th fund, not a separate fund:

Here’s another indication of the importance of the new Facebook platform: Silicon Valley VC fund Bay Partners has earmarked millions of dollars for investments in startups creating applications for Facebook. The new program, called AppFactory, will be officially launched on Tuesday.

Like the Charles River Ventures Quick Start program, the idea is to allow entrepreneurs to raise a small amount of capital with a minimum number of hurdles. Bay is promising to make a decision to invest within a couple of days of meeting the company, bypassing the normally weeks-long process of raising capital.

Unlike the CRV fund, though, AppFactory is investing only new Facebook applications. Salil Deshpande, the Bay Partner who will run the program along with senior associate Angela Strange, says that Facebook is now the Social Operating System, and that new platforms and systems historically lead to a new economy. Bay wants to be in the middle of that economy and fund as many of the “killer applications” as they are able to find.

Salil says 40,000 developers have requested keys from Facebook to create applications, and over 1,600 have already launched on Facebook.

AppFactory will be making up to fifty investments ranging from $25,000 to $250,000. Salil says that they have preferred deal terms, but are willing to consider making equity or debt investments, and will work with co-investors as well. Basically, he says, they want to help entrepreneurs build and monetize Facebook applications with a minimum of hassle.

Is the Facebook platform real? Some people question the intelligence of entrepreneurs who build their new companies entirely on the back of another startup. But in general I agree with venture capitalist Josh Kopelman - building for Facebook removes many of the risks associated with getting a startup off the ground.

Tags: AppFactory

More travel startup news tonight after Sidestep’s acquisition of TripUp: Yapta, one of the many Seattle-based travel startups (see Farecast and TripHub too), is announcing its second round of venture capital - $2.3 million from First Round Capital, Bay Partners and other investors. The company has now raised a total of $3 million.Yapta, which launched in May, has a unique approach to saving people money on travel: The core of the Yapta service is a browser bookmarklet or addon that lets users “bookmark” fares that they find on major travel sites. Ten airline and travel sites are currently supported, and many more will be added over time. See a flight you are interested in and bookmark it. The flight and fare information is then stored in your account at Yapta.

Find a number of different flight options at different sites, and then go back to Yapta to compare them. This is particularly useful when you fly Southwest or Jetblue, which do not provide flight information to other services. If the fare increases or decreases before you make a purchase, that will be reflected on the Yapta site.

If you make a purchase by clicking through to the airline or travel site from Yapta, they’ll continue to monitor the price. If it falls, they’ll ping you and suggest you contact the airline for a refund or flight coupon. All airlines offer these on price drops but few consumers follow up. Yapta will help by reminding you.

– TechCrunch

Tags: Yapta