Social Media Giants Pump $250m Into Startups

Amazon and Facebook joined the venture capital funding company Kleiner Perkins Caufield & Byers (KPCB) to invest $250 million in the sFund, an endeavour to finance new social applications and Web services.

Social gaming player Zynga, entertainment giants Comacast, and Liberty Media and Allen & Company all signed on as strategic partners in KPCB’s new fund, whose goal is to seed startups in the red-hot market for social media software.

Support For Social Media Newbies

KPCB partner Bing Gordon, former chief creative officer at Electronic Arts and board director of Amazon and Zynga, will lead the sFund. It will offer financing, counsel, and “relationship capital”, according to a statement released after the initiative was unveiled at Facebook’s headquarters in Palo Alto yesterday.

KPCB partner John Doerr, who helped finance Amazon and Google more than decade ago, was joined on stage by Facebook CEO Mark Zuckerberg, Amazon CEO Jeff Bezos and Zynga CEO Mark Pincus.

“We’re at the beginning of a new era for social Internet innovators who are re-imagining and re-inventing a Web of people and places, looking beyond documents and Websites,” said Doerr.

Zuckerberg and Pincus certainly attest to that. Zuckerberg presides over the largest social network in the world, with 500 million-plus users.

Facebook will enable access to its platform teams, beta APIs, and programmes such as the Facebook Credits virtual currency service. Zynga, whose apps such as Farmville and Mafia Wars have been popularised on Facebook, will host sessions with sFund companies to focus on management and technical development.

Zuckerberg set the tone for the sFund last week at an event to announce Facebook’s deepened social search integration with Bing. He said social software will redefine businesses over the next five years. He echoed those comments yesterday, noting that Websites will be altered to be social from the ground up.

Amazon’s involvement here is interesting. Though Bezos positioned the boon in social media as prime customer growth for Amazon Web Services (AWS) – used by Zynga and others – his company’s involvement could point to a markedly more social shopping experience for the e-commerce giant’s consumers.

Amazon and Facebook are currently testing a social shopping integration that helps Amazon shoppers see links and images of products recommended by their Facebook friends.

“Social apps are viral and, when they hit, it often happens suddenly – and then they grow explosively. That’s one of the reasons the scalable, elastic, no capex [capital expenditure], variable-cost nature of Amazon Web Services is ideal for social apps,” said Bezos.

His company is providing sFund startups with AWS Getting-Started Support for one year, priority access to worldwide Startup Events and support.