Esteemed venture capital firm Kleiner Perkins launched a new fund called sFund last month.
That's not specifically remarkable; VC firms launch new funds all the time. What makes the sFund remarkable are its other key investors: Facebook, Amazon and Zynga. Not only are these major tech companies investors, but they're also offering startups funded by the sFund advice, perks and "relationship capital" to give them an advantage over their competition.
What is the sFund all about? What are the advantages and disadvantages of the fund? And finally, is it something your startup should consider applying for?
Let's take a quick look.
Q: What exactly is the sFund?
A: The sFund is a $250 million venture capital fund designed to fund startups and companies focusing on social media-related initiatives. Its manager is Kleiner Perkins partner Bing Gordon, current board member of Zynga and Amazon and former chief creative officer of EA.
Q: What makes the sFund unique?
A: The first thing that makes it unique is its investors, which include Facebook, Zynga, Amazon, Comcast, Allen & Company and Liberty Media. All of these companies have committed to providing assistance in their areas of expertise to startups funded by sFund. Facebook, for example, is giving startups early access to its platform and APIs, while Amazon will give them a free year of access to Amazon Web Services. sFund also has a broad mandate within social and is allowed to make investments as small as $100,000 and as large as $100 million.
Q: Who has been funded by sFund?
A: Cafebots is the first and only company to receive funding from sFund so far. It raised a $5 million Series A.
Q: What is the biggest advantage to being funded by sFund?
A: While the money is nice, the biggest benefit to being part of sFund is the direct access to some of technology's most important companies. Priority access to Facebook, Amazon and Kleiner Perkins could be what helps a startup launch quicker, secure big partnerships or get substantial press. sFund companies also get access to some of tech's most successful entrepreneurs.
Q: What is the biggest disadvantage to being funded by sFund?
A: Unfortunately, the answer to that question is not clear quite yet, as it's also an untested fund. But one disadvantage may be that joining sFund will tip off these companies to exactly what you're doing. There's no guarantee that Facebook won't like your idea so much that they build their own version.
Q: I have a startup and I'm looking for funding. Should I apply for sFund?
A: Here's a question to ask yourself: will my startup benefit greatly from priority access to Facebook's platform, Amazon Web Services or Zynga's gaming platforms? If access to these companies could make all the difference for your company, then it doesn't hurt to try. Once you tie the knot with an investor though, it's almost impossible to break off the relationship, so the most important thing is figuring out whether or not you and your potential investor are on the same page.
Image Courtesy of Flickr, KPCB