Salesforce.com, VCs Create Seed Fund for Future Clients

Silicon Valley venture capitalists Bay Partners and Bessemer Venture Partners have pooled resources with Salesforce.com to roll out a fund that will invest in companies’ development activities on Salesforce.com’s platform.

Typical investments will equal about US$500,000 each, totaling $25 million over the next three years.

The program focuses on early stage funding for companies that have built business applications on the Force.com platform, Salesforce.com’s newly introduced Platform as a Service. Force.com was developed to allow a company to build any kind of business application and then automatically deploy it as a service to small teams or entire enterprises.

Old Hands

Under the program, Salesforce.com will work with Bay and Bessemer in an advisory capacity, providing technical, background and due diligence assistance. Bay and Bessemer will select the applications based on a series of qualitative and quantitative tests. Salesforce.com will also provide design review, packaging and distribution best practices, and certification consultation for companies building applications on the Force.com platform.

Bay Partners and Salesforce.com are already old hands at this sort of collaboration, says Salil Deshpande, a partner at Bay Partners. “We have been investing around Salesforce.com Appexchange for the last two years,” he told CRM Buyer.

A Wider Presence

The point of the fund is to encourage — and of course underwrite — companies’ use of AppExchange as their platform of choice, allowing Salesforce.com to manage the administration of the system. It is part of the company’s larger strategy of repositioning itself away from its CRM roots to a wider presence within the enterprise.

“What users have in common is a need to accelerate time to market while focusing on their core competencies, says Ariel Kelman, senior director of platform product marketing atSalesforce.com.

“If they can outsource the infrastructure to someone else but maintain control of the development process they are that much further ahead,” he told CRM Buyer.

Common Strategy

It is a common strategy to provide financing to clients in one form or another in order to encourage adoption and loyalty. What is unique about this fund is that it is based around a platform.

“The platforms in general are changing, moving away from Java or .Net to platforms like Force.com,” Deshpande said. We are moving to invest in these platforms early in the process.”

Deshpande does not believe a similar platform will arise to compete with Salesforce.com’s products.

“Markets don’t support a many platforms because the value proposition goes down in proportion to how many there are. In this case, we think Force.com is clearly the leader.”