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RockYou, the widget maker best known for Facebook's Super Wall application, has hired Morgan Stanley to raise a new financing round at a $400 million valuation, according to a hedge fund manager whom the investment bank solicited for the deal. Slide, a competitor, recently raised a round and is now worth $550 million, at least in its investors' fantasies, which sets a high bar for RockYou. Slide is the biggest reason why RockYou might actually get the financing. After it struck its deal, cofounders Jia Shen and Lance Tokuda could argue for a comparable value. But not all is rosy for Shen and Tokuda.

In Slide, RockYou now faces a very well-financed rival which took $50 million from its new investors. And Slide has real advertisers like McDonald's, AT&T, and BP; RockYou is better known for its plan to charge other Facebook-app makers to advertise their wares. (Does that strike anyone as a pyramid scheme?) Finally, there are RockYou's cofounders themselves — perhaps the biggest reason they won't get $400 million for RockYou.

Last year, they settled with their ex-employer Iconix, which charged them with developing the idea for RockYou while still working there. The episode was messy, and public. One would think RockYou's prospective investors would take it into account before putting their money in Shen and Tokuda's hands.