Facebook fund slow to launch

A surprising thing about The Founders Fund’s announcement last week that it had raised its first institutional fund was that the firm had not sewed up the details of a much smaller fund that it announced three months ago.

In September, Founders Fund partnered with Accel Partners and Facebook (a portfolio company of both venture firms) on a $10 million seed fund to invest in Facebook applications. Accel’s Jim Breyer and Peter Thiel of Founders Fund both sit on the board of Facebook.

Thiel says that he expects the partnership should be cemented within a few more weeks and indicated that the Founders Fund has invested in a “handful” of undisclosed Facebook applications.

The market for Facebook applications, widgets for use on the social networking website, has delivered plenty of attention to investors, much in the same way that Java funds of the mid-1990s did when they first came out.

Bay Partners, in a separate venture, announced in July that it would allocate a certain portion of its latest fund to also invest in Facebook applications. The firm hired PR firm Porter Novelli in advance of the announcement to help publicize the move. The firm’s Facebook strategy was part of a firm-wide overhaul after several partner departures.

The program accounts for only a small part of Bay Partner’s $300 million fund, but garners plenty of attention. Bay Partners has since asked the PR firm to do less promotional work so that the partners can focus on doing deals, says Salil Deshpande.

The firm has invested in six deals since the program was created, only one of which has been publicly announced.

The one Bay Partners deal to be announced so far is its backing of Buddy Media, makers of the AceBucks virtual currency application. Facebook users earn the currency by playing games, taking surveys, inviting their friends to use an application. AceBucks has opened its own programming code to application developers in a bid to become the standard currency for Facebook.

In September, the New York-based company raised $1.5 million from Bay Partners and other individual investors, including Thiel, Keith Bank, James Altucher, Roger Ehrenberg and Mark Pincus. —Alexander Haislip