600 Developers Apply for Free* fbFund Money
As most everyone knows by now, fbFund is a program recently set up by Facebook and funded by Founders Fund and Accel to give grants to promising entrepreneurs building on Facebook Platform. The first set of 10 fbFund grant recipients were announced in July, and round 2 has now begun.
Last week, Facebook announced that it received over 600 applications from developers like GroupCard, Socialfly, and RealGifts hoping to land between $25k and $250k to build their businesses on Facebook. Today, Facebook said that it will announce the 25 $25k winners for Round I of the competition on October 10th. Those 25 winners will also move on to Round II, where five $250k grants will be awarded. Facebook users will have a say in deciding the winners of Round II.
While applying for fbFund grants may be the best/only path to seed capital for many entrepreneurs, it’s important for all interested developers to weigh the terms of the grants against the terms of other fund raising alternatives. While they are non-recourse grants (and not investments), fbFund grants do come with some important stipulations. According to those familiar with the details of fbFund grants, these include:
- Phased grant release based on application performance. fbFund recipients get 25% of the grant upon signing the agreement, 25% at 1k weekly active users, 25% at 5k WAU, and 25% at 10k WAU.
- Right of future investment. If you raise more than $500,000 in a future round, Accel and Founders Fund have the right to make the first offer before you talk to other investors.
- Even if you choose to go with other investors, Accel and Founders Fund have the right to join at up to 50% of your investment round.
Obviously there are many unique advantages to taking fbFund money. Recipients get to “Learn best practices and receive valuable feedback from Facebook engineers and other fbFund developers,” and get special press attention at f8 and on the Developer website. Of course, entrepreneurs should always take all terms and options into account when examining financing alternatives.
