Companies Rely More and More on Facebook
Investors are pumping more and more money into web services that are heavily reliant on Facebook. So how big is the economy around the world's most popular social network?
An email came through to me last night that, in many respects, is the stock-and-trade of the startup world: a team of entrepreneurs company has received some funding.
In this case, the site in question is the Paris-based Smartdate, and its received $2.2m from investors to try and build its idea of using Facebook data as the basis of a matchmaking service.
So far, so normal. We've heard a great deal of this over the years; venture capitalists and investment funds putting money into companies that are building web services.
But there's something else going on here. From the swathes of press releases and funding announcements I trawl through each day, it feels to me like we're hearing much more recently about sites specifically and publicly built using Facebook as a platform. In many cases, they are almost entirely reliant on Facebook to provide their link to users.
Now, in part, that's no surprise: building up an ecosystem around Facebook is something that the company has tried very hard to do with F8 and Facebook Connect - and it's a smart move, because they know that when lots of people are invested in your success, you are less vulnerable to competitors.
But if so many people are pumping into companies that are almost entirely reliant on the world's largest social networking site, exactly how big is the economy around Facebook?
Let's see if we can work it out.
We know from a number of reports and internal estimates that Facebook itself is due to post somewhere upwards of $1bn in revenue for 2010, but I'm more interested in what the other companies are doing.
What levels of investment are going? How many companies rely on Facebook to keep themselves going? The conservative estimate must stretch into several billions of dollars worth of business at least.
After all, the headline sites who make the most from this business are worth hundreds of millions - and some are even looking to launch on the stock market. Even if they don't entirely base their business on Facebook (in many cases, they are available on - or partner with - other social networks too) the spread of users suggests that they're heavily invested in it.
• Back in November, Electronic Arts bought social gaming site Playfish, in a deal we are now told was worth around $275m.
• Meanwhile Zynga, another developer of popular games has already taken more than $200m of venture capital.
• Other companies making applications include Slide (also closely linked with MySpace but funded to the tune of $78m); Mindjolt (recently bought by MySpace co-founder Chris DeWolfe, funding not public); and of course FriendFeed (bought by Facebook for around $50m).
• On top of that, there's a huge number of companies like the aforementioned Smartdate, Plancast ($800,000); and a whole bunch of companies pushed forward by Facebook's own $10m fbFund.
That's just the start.
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