Tec hCrunch reported the launch of iFund, a $15 million fund from KPCB for startups developing iPhone applications. This comes next to two other product focused funds, the fbFund by Facebook and the AppFactory by Bay Partners.

John Doerr, Partner at Kleiner Perkins Caufield & Byers said,

“A revolutionary new platform is a rare and prized opportunity for entrepreneurs, and that’s exactly what Apple has created with iPhone and iPod touch. We think several significant new companies will emerge as this new platform evolves, and the iFund will empower them to realize their full potential.”

The focus areas for this fund are social networking, m-commerce, communication, entertainment and location based services. I think they should also add business related applications since iPhone is directly competing with Blackberry. What about having a CRM or sales intelligence application specifically for iPhone. I feel that it will be the next obvious move for iPhone for targeting business customers.

On the other side, product focused funds is a relatively new concept and yet to be proven. Even in the case of Facebook focused funds, I have not seen many applications getting funded. I think the problem lies in the core concept of these funds. If these funds remain individual application oriented, they will face problems of scale and competition. We all know of many applications on Facebook with exactly similar functionalities. However, if these funds focus on companies building various applications or an extension of their existing services, then there is virtually no difference between them and any other fund; for example Wallop which builds social applications for Facebook but they have the same application for Bebo as well. Perhaps, this is the reason why not many applications have been funded.

Do you think this trend of product focused funds will keep up? Are we going to see funds for Salesforce or Amazon Web Services applications which, in my view, will have better business models than advertising.

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