News of another photography app for the iPhone raising an insane $41M from the likes of Sequoia, Bain Capital and others quickly spread through the interwebs today and has lead to numerous people opine that we have officially entered another bubble.

From a cursory glance, this seems to be just another entry into the already crowded photo app market dominated by the likes of Instagram, Hipstamatic, etc. and its hard to believe that investors would seriously fund another startup in this space (especially the amounts that they have). I mean, no one would seriously throw in $41M for a social, mobile, local, photo-sharing app (as a mock slide of their pitch deck suggests) and say “Not since Google have we seen this.’ Could they??

Sounds absurd and was enough to get me to download the app. Having played around with it over a few minutes, I can see it has potential but certainly not enough to justify a $41M first round after just a few days of launch. The UI, while could use some work, loads seemlessly – images pop up on my iPhone almost instantly and before you realize it, you begin to feel a bit creepy spying on people’s photos. I spent a few minutes looking at the pictures people put up near me (however they define “near”) and even came across a fellow YCombinator mate (@chrysb), whom I havent spoken to in a few years which was kinda cool. The app has all the makings of what made Facebook successful – pure voyeuristic pleasure in browsing other people’s photos and seeing what they are doing at any given time. The difference is – you don’t necessarily know these people and the common bond is location. And it does that job pretty well. I can see this being useful at concerts, parades, revolutions, festivals, sports events, and the like as this grows. Does that warrant $41M? I don’t think so. Especially not without a clear revenue model (which might be present though not immediately apparent – local deals?).

However, given the founders are serial entrepreneurs with a great track record, it’s not a silly bet. In fact, just the mere fact that raising this much money has generated so much controversy, might help them get over the initial chicken-egg scenario required to make this succeed. Time will tell the fate of color.com.