Facebook targets start-ups

10 February 2012

PALO ALTO: Facebook, the social network, is seeking to officially engage with a range of online start-ups, as it endeavours to enhance the scope and scale of the tools available across its pages.

It has recently unveiled a new programme, called fbStart, offering selected companies that regularly back Web 2.0 start-ups a first glimpse of the features it is developing.

One "seed fund" involved in fbStart is TechStars, which has helped nearly 100 start-ups with $125m since 2007. It believes around 40 enterprises now in its portfolio could take part in this scheme.

"We've been asking Facebook for ways to get better access and advance information for our companies, and this is their way of doing that," David Cohen, founder and chief executive of TechStars, told the Wall Street Journal.

Other operators signed up so far include Seedcamp, sFund and Y Comb. 500 Startups, a $30m "business accelerator", is also a member of this group, and predicts most of the 70 firms it supports are likely to utilise fbStart.

Christine Tsai, a partner at 500 Startups, stated Facebook would benefit from understanding how developers might employ its new tools. "They're putting a lot more manpower behind working with us in a more formal way," she said.

An example of how such models may evolve in practice is BranchOut, an application providing a similar service to LinkedIn, the business-orientated social network, but hosted on Facebook.

Currently, BranchOut has 10m members. When individuals join, the details of their friends and contacts on the site are entered into a database, reaching a total of 300m users at present.

More specifically, 4m members use BranchOut's app every month, and Rick Marini, the company's chief executive, suggested that a mixture of message targeting and natural growth are the key goals.

"If we're sending people relevant jobs, that's going to get people to come on a regular basis," he said. "It's a network effect business and once you hit a tipping point, then everybody piles on."

Zynga, the gaming company behind FarmVille, also makes around 90% of its revenue from Facebook. In return, Facebook derives 12% of its revenue from Zynga, and the two firms have announced plans to pursue a more co-ordinated tie-up.

"The parties acknowledge that FB desires to enable Zynga to build the Zynga Platform on top of the Facebook Platform, and the parties desire to ... work together to increase the number of users of each party's products and services," a Facebook filing with the Securities and Exchange Commission said.

Data sourced from Wall Street Journal; additional content by Warc staff