Will Facebook Start Investing More in Its Own Apps Again?

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Over the course of the past three years, we’ve seen a tremendous amount of innovation on the Facebook Platform. Thousands of new applications are built every year, and many of them have grown into successful, and in several cases, quite large, businesses. Lately, the vast majority of those are social game developers.

But is this what Facebook envisioned when it launched the Platform three years ago – and is it even what it really wants now? As Facebook crosses $1 billion in revenues this year, the role the Platform plays in revenue generation is increasingly coming into the limelight. Is Credits, Facebook’s universal virtual currency, going to be the primary vehicle through which Facebook generates revenues on the Platform? What is Facebook’s ultimate vision for how Platform fits into what it’s building?

A Peek Into Facebook’s Platform Vision: fbFund Winners

Facebook has always used broad language to describe its vision for the Facebook Platform and Connect: Facebook wants to make a variety of online experiences more social, from travel to education to games to enterprise software.

As such, two years ago Facebook created the “fbFund,” a seed-stage grant program (in year one) that became an investment incubator (in year two) designed to cultivate startups building rich social applications congruent with Facebook’s vision. Looking at the types of things fbFund chose to fund and incubate gives you a sense of the diversity of applications Facebook hopes will thrive in the long run on the Facebook Platform:

  • Commerce (RentMineOnline, RunMyErrand, Workstir)
  • Communication Tools (GroupCard, NutshellMail, Plancast)
  • Content/Media Discovery (Navify, Photos I Like, Sortuv)
  • Dating (Thread)
  • Faith (MyChurch)
  • Fashion (Weardrobe)
  • Games (HitGrab, Funji, Gameyola, Paradise Paintball)
  • Health and Fitness (RunThere)
  • Marketing Services (Wildfire)
  • Non-Profit (Samasource, Vittana)
  • Publishing (Networked Blogs)
  • Security (Life360)
  • Travel (TravelBrain)
  • Wedding (Weddingbook)

This list represents a diversity of web apps that Facebook hopes access to the social graph can fundamentally improve versus existing solutions. While Facebook has only built core applications (like Photos and Events) itself, it’s relying on the developer community to build the apps that fulfill this vision by building sustainable businesses in many of these areas.

What Have Other Investors Funded?

Although fbFund has been active in seeding a diverse group of startups that hope to leverage the Facebook Platform and the social graph to improve upon existing consumer web apps in a variety of industries, other investors have been putting the lion’s share of their bets on games.

For example, here are a few notable venture investments from around the fourth quarter of 2009:

Sources: Inside Facebook and Inside Social Games

While LivingSocial and Thread are examples of companies building on Platform/Connect outside the games category that received funding in the fourth quarter, and there have been a variety of other angel investments in Facebook-related companies, no other category comes close to matching the overall amount of investment that games and the games ecosystem has seen. (The most notable other category to note is the enterprise marketing tools companies, like Buddy Media, Context Optional, Wildfire, and Involver, who are helping brands build an integrated Facebook presence. This is becoming an increasingly competitive area as more companies enter the space.)

And that leaves us with two questions: 1) Who’s going to build everything besides games? And 2) What will become of fbFund?