Word flashed around the Internet Thursday, Aug. 16, that Craig Ulliott, the maker of popular Facebook application "Where have I been" had found the pot of gold at the end of the proverbial rainbow, as travel site TripAdvisor.com was buying his application for $3 million. For a program made in his spare time — thanks to Facebook's opening its application programming interface, or API, in May to invite outside developers to make new features and content for user profiles — it was an eye-popping number.

Alas, the rumor, which first appeared on Inside Facebook, isn't completely accurate. TechCrunch reports that TripAdvisor is only in discussions with Ulliott, and a statement from a TripAdvisor representative to the multitude of inquiries reads, "This is untrue. Beyond that, we do not have any comment."

Nevertheless, deals like this are just what VCs including Bay Partners and Altura Ventures are hoping to see plenty of, as they spread the word of their willingness to back developers using Facebook's API. Bay Partners' seed program — AppFactory — is targeting tens of investments from $25,000 to $250,000 in Facebook developers using a fast-track approval process, and Altura Ventures recently announced a fund that also solely backs entrepreneurs making Facebook platform apps.

Beyond that, venture firms are backing startups such as Socialmedia.com and Slide.com, whose focus is on making/buying/monetizing widgets and applications for Facebook and MySpace. The purchases of Facebook applications "Favorite Peeps" by Slide for a reported $60,000 and of Extended Info by SideStep for an undisclosed amount in June got the dealmaking ball rolling, and a seven-figure buyout could get a gold rush started. —George White

See Inside Facebook posting
See TechCrunch post
See Tech Confidental post on AppFactory
See VC rating post on Appfactory

Tags: vc, venture+capital