VCs Calling it Quits on Facebook?

Looking for funding for the next hot Facebook application? You aren’t going to find it. So claims Nicholas Carlson who quotes an executive at one of the Facebook application firms as saying “It would be insane for a new developer” to begin creating new apps on the platform. This exact same issue was brought up at Graphing Social Patterns East back in June when one of the large developers suggested that somebody ask Facebook how they expect a new developer to launch on the platform now?

Honestly, I think there is still an opportunity for well designed applications to succeed on the Facebook platform but it has definitely become a lot harder for them to. Additionally, I have spoken with numerous investors that are no longer betting on the Facebook platform. Even Facebook’s venture capital fund has had some issues with finding good applications to fun (although there is buzz that a few of them are about to receive funding).

Whatever the case, as Facebook makes significant adjustments to their platform, it becomes much more challenging to build a sustainable business. Also, in contrast to Windows where old systems remained functional as is until upgraded, Facebook will be forcing the new user profile to everybody. That makes it much more challenging for developers in the long run. Valleywag suggests that all of these challenges are going to result in companies like Zynga and SocialMedia being unable to find funding.

I’ve heard buzz about one of the companies facing some challenges raising money but no word on others. In my own opinion I think Facebook Connect is going to change the whole dynamic and move much of the platform beyond the Facebook domain. It will be interesting to see how the next few months pan out!