Getting Applications Funded

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Eric Eldon (VentureBeat), Jeff Clavier (Softtech VC), Jason Beckerman (Teach The People, Dank Apps), Lee Lorenzen (Altura Ventures) spoke about investing in social network applications.

Why the space valuable? Size and growth of audiences is driving value. The opening of the API’s at MySpace and OpenSocial is driving huge opportunities.

Application developers ask VCs why should they take the money when they are making good money with their applications. The answer according to the panel is that they can help build the company into something with substantial scale.(my note: this is a standard VC pitch, so make them prove they’ve done it if you are taking their money for this reason. A much better reason is their connections and how they can help you raise more money in later rounds.)

Each sector may provide one or two leading applications, but can any individual segment get to scale. Maybe there is a play in consolidating leading applications across sectors.

What are the big opportunities for a small Facebook developer? Build something good, get good reviews and use that to drive adoption. Growth may be slower, but users wills be more valuable.

Focus on building your business. Build a model that pays for your servers, then your salaries, then makes a profit. If you need inspiration, go to Borders. Look at the magazine racks and find a niche that you can serve.

As for valuations, make its a discussion.  In the end, make sure you feel good about taking the investment.

[tags]gspwest08, graphing social, Facebook application funding[/tags]

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