Facebook VC: We're Investing in Facebook Apps Too
For Facebook application developers, not all VCs are created equal...at least when it comes to the support they can lend your company if they also happen to, say, sit on the board of Facebook itself. — That's the position Jim Breyer …
Context & Ripple Effects
Facebook Platform is barely two months old and the money is arriving fast: Bay Partners launched a dedicated Facebook-apps-only fund just yesterday, and VC commentary from Andrew Chen has been framing the platform as an investment category since late June. What distinguishes this story is who is investing — Accel's Jim Breyer holds a seat on Facebook's own board.
That overlap matters because developers are actively debating what an application is worth, and platform direction — policy changes, feature decisions — flows through that boardroom first. An investor with a board seat has visibility into those decisions that rival funds cannot match.
First-order effects
- App developers choosing among investors now face a new criterion: whether their VC can see Facebook's roadmap, giving Accel-backed teams an informational edge in a market where platform policy shifts can make or break an app.
Second-order effects
- Rival funds like Bay Partners must compete for deals against a firm whose advantage is structural rather than financial, pushing them to differentiate through dedicated capital size or developer support instead of access.
Third-order effects
- If platform insiders routinely invest in their platform's ecosystem, the line between governing a platform and funding its participants blurs, raising governance questions about conflicts of interest that boards of future platforms will have to answer.
The trend: Platform ecosystems are pulling venture capital inside the walls, with the platforms' own boardrooms becoming the best vantage point for betting on their developers.