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Kleiner Perkins creates $250M social fund

Massive sFund to fuel the tremendous growth seen in startups launching on the Facebook Platform

Financial trends and news by Ronny Kerr
October 21, 2010
Short URL: http://vator.tv/n/12ea

Kleiner

Kleiner Perkins Caufield & Byers announced sFund Thursday morning, a $250 million fund for social apps built on the Facebook Platform. John Doerr, partner at Kleiner Perkins, announced the sFund at a press conference hosted at Facebook headquarters in Palo Alto, CA and streamed live over the Web.

Joining Doerr on stage at the event were several high-profile executives whose companies are all partners in the creation of the new fund: Jeff Bezos, CEO of Amazon; Mark Zuckerberg, founder and CEO of Facebook; Mark Pincus, CEO of Zynga; and Bing Gordon, former chief creative officer at EA and partner at Kleiner Perkins. Other partners include Comcast, Allen & Company LLC, and Liberty Media.

sFund partners

The mission of the sFund is to “find, fund, and accelerate entrepreneurs building for the social web,” says Doerr.

He cited four different companies as examples of the kind of innovation the sFund will be seeking: CafeBots, a startup just coming out of stealth today; FlipBoard, a social-generated magazine; Jive Software, collaboration software; and Lockerz, an online community for Generation Z.

The sFund sounds and feels a lot like the iFund, a fund announced by Kleiner Perkins in 2008 to encourage iPhone development.

Back in March, to coincide with the launch of the iPad, Kleiner Perkins doubled the amount of the iFund to $200 million, still entirely dedicated to companies innovating for iOS, which includes the iPad, iPhone, and iPod Touch. The fund has tapped into numerous startups already, including location-based app Booyah, game developers ngmoco and Zynga, and music discovery app Shazam.

iFund has already been counted as a huge success for Kleiner Perkins, if only because ngmoco just sold to DeNA, a Japanese mobile gaming company, for $400 million plus a $100 million earnout. For Kleiner Perkins, which owns around a third of the sold startup, that could equal a $100 million return on its investment.

In the same way that iFund recognizes the ongoing shift from the personal computer to the mobile device, the sFund sees a shift in the web from information and transactions to personal relationships and sharing experiences.

“Every industry is going to get fundamentally rethought and designed around people,” said Facebook CEO Mark Zuckerberg. He argues that his site’s photo service was the most successful on the web because “it had deeper social integration than any other product.”

He thinks you can pick pretty much any task or service that exists today, add a social element to it, and the social-powered version will always be more interesting and popular.

No startup best demonstrates the power of social than Zynga, creator of games like FarmVille and Mafia Wars, some of the hottest and fastest-growing games on the web. It’s in the nature of the social application.

“These social apps do tend to be very viral," said Amazon CEO Jeff Bezos. "It's kind of built into the nature of the application, so when they hit, they can grow violently.”

Scaling that kind of violent growth requires solid financing, and that will probably play a large part in the sFund.


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Description: Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users.  Zynga’s games are avail...