In March of this year, venerable Silicon Valley VC firm Kleiner Perkins Caufield & Byers announced it had ‘earmarked’ $100m (€64.2m) for worldwide investment in companies being created on Apple’s iPhone/iPod touch platform. The iFund is a partnership between KPCB and Apple, which will provide the firm with ‘market insight and support’.

KPCB is one among several VC firms tying up with platform providers, including the UK’s Eden Ventures and Salesforce.com with their Million Pound Challenge for companies developing on Salesforce.com’s Force.com platform; and Accel Partners, The Founders Fund and Facebook with their fbFund for Facebook application developers.

Investor interest in new platforms is understandable. As KPCB Partner John Doerr writes on the fund’s website, ‘A revolutionary new platform is a rare and prized opportunity for entrepreneurs, and that’s exactly what Apple has created with the iPhone and iPod touch… we think several new significant companies will emerge as this new platform evolves’.

In introducing AppFactory, its independent initiative to fund Facebook app developers, Bay Partners – another well-established Silicon Valley VC firm – makes a similar point: ‘Facebook, in essence, became the social Operating System. Historically, the creation of an operating system, or platform, has led to a new economy which includes a marketplace of applications’.

It is also clearly in the interest of platform providers themselves to encourage development on their platform. This is the reason why Microsoft, Sun, Qualcomm, Nokia, Oracle and others run extensive partner programmes. Furthermore, platform providers often put their own money down to encourage early adoption of their platforms.

For example, Google Gadget Ventures is making $5,000 (€3,200) grants to Google Gadget developers worldwide, with the chance for winners to receive further seed investment of $100k (€64k) from Google. In Autumn 2007 Amazon.com ran the Amazon Web Services Start-Up Challenge to encourage development on top of its utility computing platform, which offers startups on-demand computing, storage and other facilities. The winner of the challenge received $50k (€32k) in cash, $50k in Amazon Web Services credits and an investment offer from Amazon.

For platform providers, spending cash on grants and seed investments to yield greater platform adoption is understandable. What is more difficult to understand is why VCs would put their own money on the line in these exercises. To generate returns VCs seek out the highest-potential startups – so why restrict prospects to just a narrow slice of the startup universe?

fbFund works much like Google Gadget Ventures, providing grants of $25k (€16k) to $250k (€160k) to Facebook application developers; however, the $10m (€6.4m) investment pool comes not from Facebook but from Accel Partners and The Founders Fund. The grants are open to companies globally so long as they have not already received VC funding; in return for the grants, Accel and Founders Fund receive right of first refusal for VC investment in the winning companies.

Eden Ventures’ challenge is set up as a competition rather than a fund; entries from UK and Irish entrepreneurs must be submitted by 7 July 2008 and the winner will have the chance to negotiate with Eden Ventures for an investment up to £1m (€1.3m) in exchange for at least a 20% equity stake.

Apple, Facebook and Salesforce.com are assisting KPCB, Accel & Founders Fund and Eden Ventures, respectively, with their investment screening processes. This suggests one reason for the creation of such vehicles on the part of VCs. The strategic insight offered by the platform provider coupled with “official endorsement” during the early stages of an emerging platform may be enough to counteract the downside of tying up funds for such a narrow purpose.

Furthermore, in the case of fbFund, Accel Partners and The Founders Fund are investors in Facebook itself - so they stand to benefit should the fbFund encourage overall adoption of Facebook’s developer platform, regardless of whether or not individual grantees succeed.

Two questions linger, though. The first is whether there are enough quality businesses being built atop these new platforms to warrant so much investment interest. fbFund, for instance, rejected all applicants from its first round of submissions in January 2008.

The second question is whether platform-specific funds are necessary or even advantageous for making investments into the most compelling startups developing on those platforms. Take the case of Camrivox, a Cambridge-based startup developing on Salesforce.com’s Force.com platform. The company’s products allow businesses to integrate their telephone equipment with Salesforce.com, so that when a call from a customer or sales prospect comes in their record will be automatically displayed on screen. Before Eden Ventures and Salesforce.com were taking submissions for their £1 million challenge, Camrivox had already raised £2.5m (€3.5m) in VC funding from CREATE Partners, Cambridge Capital Group, NESTA Ventures, IQ Capital Partners and others.

SpringSource, the US and UK-based provider of open source software for enterprise applications, has raised $15m (€9.5m) in series B funding from new investor, Accel Partners, and existing investor, Benchmark Capital. SpringSource has developed a range of Java infrastructure software, support and service systems for enterprise. The funding will be used to expand the company's operations and accelerate its growth strategy.

Vivendy Therapeutics, the Switzerland-based biopharmaceutical company, has raised £7.3m (€9.2m) in the second closing of its series A funding round from new investor, Aescap Venture and undisclosed investors. Vivendy Therapeutics is developing enzyme replacement therapy (ERT) for Morbus Morquio, a rare lysosomal storage disease. The funding will be used to develop the company's product to the point of market introduction.

Fotech Solutions, the UK-based Distributed Acoustic Sensing (DAS) specialist, has raised $6.5m (€4.1m) from Scottish Equity Partners, Energy Ventures and Shoaibi Group. Fortech Solutions has developed a problem identification system for the oil and gas sectors. The company's Distributed Acoustic Sensing (DAS) system allows a standard optical fibre cable to act as a microphone over significant distances, enabling acoustic data to be used in conjunction with software to monitior pipelines and wells. The funding will be used to commercialise the company's technology, and to finance the acquisition of a spinout from the University of Surrey which has developed fibre-optic sensing technologies.

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Plazes, the Switerzland-based provider of web services for geo-social navigation, has been acquired by Nokia for an undisclosed amount. Plazes has developed a context-aware, social-activity service which enables users to publish and share their current location with others, creating a collection of their favourite and day-to-day locations in a geo-database. The acquisition will enable Nokia to accelerate and extend its context-based service offerings. The acquisition is subject to customary closing conditions and is expected to close in the third quarter 2008. After closing, Plazes will become part of Nokia's Services & Software unit.

Prime Carrier, the Ireland-based provider of software solutions for the wholesale and retail telecommunications markets, has been acquired by Flint Telecom for an undisclosed amount. Prime Carrier has developed a range of on-demand, real time trading solutions for the telecommunications and media industries. The acquisition will enable Flint Telecom to strengthen and accelerate its market positioning and product strategies. The acquisition agreement sees Prime Carrier become a 100 per cent owned subsidiary of Flint Telecom.

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Clearswift, the UK-based provider of web and email security solutions for enterprise, has appointed Christopher Moriarty to the position of director of channel sales, Americas. Prior to joining the company, Mr Moriarty was responsible for sales channels at Guardian Edge. Before that, Mr Moriarty served as director of channel sales and subsequently senior channel manager with Trend Micro/Intermute. Mr Moriarty has also held various channel management and sales roles at Symantec/Brightmail, Network Associates, Seagate Software, Merisel and Patriot Computers.

Coull, the UK-based developer of web based tools for online video, has appointed Hitesh Bhatt as commercial director. Before joining the company, Mr Bhatt held the position head of agency sales at MSN UK. Mr Hitesh joined MSN UK three years ago as a sales manager. Before that, Mr Hitesh held senior roles at Emap, MTV UK and Yahoo!

Miyowa, the France-based provider of mobile Instant Messaging and entertainment for communities, has appointed Sergio De Acha as senior vice president of sales and business development. Before joining the company, Mr De Acha was senior vice president of sales and business development at ACCESS Systems Americas, formerly PalmSource. Before that, Mr De Acha held the position of director, licensing and commerce services at Liquid Audio and prior to that served as senior manager, business development at Silicon Graphics.

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Média Board Régie, the France-based specialist in commercialising advertising space in educational facilities, has revealed to Library House that the company has future fundraising planned. Mr Fabrice Delon, Média Board Régie's founder and chief executive, informed Library House that the company intends to begin fundraising in September 2008. Mr Delon also stated that the company intends to use the investment towards a new line of business.

Twidox, the Germany-based developer of a platform for user generated online documents, has informed Library House that the company is planning to open its third funding round. Mr Nicholas MacGowan von Holstein, Twidox's co-founder and managing director, stated to Library House that he believed that the company would seek fundraising during Q1 2009.

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