Bay Partners last month launched an accelerated approval program for making small investments in new media companies that leverage Facebook, the fast-growing social networking service.
Bay Partners calls the program AppFactory and it says that it aims to invest between $25,000 and $250,000 in “tens of investments” in startups that take advantage of Facebook’s application programming interface (API). The AppFactory follows Facebook’s announcement in May that it would give access to some of its systems to outside developers in hopes of gaining ground on MySpace.
The move to establish an expedited funding mechanism for early stage opportunities mirrors the QuickStart program launched last fall by Charles River Ventures. In that program, CRV debt finances early stage startups with loans ranging between $100,000 and $500,000. The loan converts to equity financing at a discount to what the next round of investors are paying. The idea, spearheaded by Partners George Zachary and Bill Tai, is designed to get the firm’s fingers into as many possible early stage opportunities as possible.
Bay Partners’ move is the first effort to focus specifically on the Facebook platform. For Bay Partners, the push to back Facebook apps comes as the firm aims to reinvigorate itself since it closed Fund XI in 2005 with $290 million in capital commitments.
Last fall, Bay Partners asked investors to amend the terms of its current fund so that General Partners Chris Noble and Bob Williams could transition into part-time roles. The two have subsequently been dropped from the firm’s website. The departure of Noble and Williams came after firm founder John Freidenrich retired in 2005 and General Partner Loring Knoblauch resigned.
A few months after Noble and Williams left, Dino Vendetti left to join startup firm Formative Ventures. Bay Partners responded by promoting Eric Chin and Neil Sadaranganey to partner. They each joined in 2005. Chin was previously a venture partner and Sadaranganey an entrepreneur-in-residence. —Alexander Haislip