Web 2.0 at its peak? Venture investments hit US$1.34 billion

Facebook accounts for 22 per cent of 2007 investments

U.S. investments in Web 2.0 companies reached an all-time high of US$1.34 billion in 2007, almost double the previous year's total. But one company -- Facebook -- accounted for a full 22 per cent of that windfall, and the total number of investments seems to be leveling off after several years of meteoric growth, Dow Jones VentureSource said in research issued Tuesday.

Facebook took in US$300 million, including US$240 million from Microsoft, the biggest Web 2.0 venture capital deal of the year according to VentureSource. (Some industry watchers, such as the organizations behind the Moneytree Report, do not consider the Microsoft-Facebook transaction to be a true venture deal, however, because it's one vendor investing in another.)

Coming in a distant second was Ning, a Palo Alto company that lets users create their own niche social networks and which raised US$44 million from venture capitalists.

Total investments by dollar rose heavily the last five years, from US$79 million in 2003, to US$232 million in 2004, US$309 million in 2005, US$716 million in 2006 and US$1.34 billion in 2007.

But there are signs that the total number of companies receiving investments is leveling off.

"From 2002 to 2006, Web 2.0 deal flow doubled every year, but 2007 saw deals increase 25 per cent to 178 from 143 deals in 2006," Dow Jones VentureSource reported. "Nearly all of this growth happened outside the San Francisco Bay Area, the longtime home of Web-related innovation and investment."

Web 2.0 companies are a good investment for venture capitalists because "they can do so much with so little," research director Jessica Canning of Dow Jones VentureSource says in a news release. "A few million dollars and they're not only up and running but attracting eyeballs and advertisers."

Investors can get in on the cheap, relatively speaking. The median investment for Web 2.0 companies in 2007 was US$5 million, less than the country-wide median of US$7.6 million per venture deal.

2008 could be a "make-or-break year" for many Internet companies that rely on advertising, because of a slumping economy and slowing click-through rates for online advertising, according to VentureSource.

Here's a look at the top rounds of funding for Web 2.0 companies in 2007:
  • 1. Facebook: US$240 million on October 25

  • 2. Facebook: US$60 million on December 3

  • 3. Ning: US$44 million on July 11

  • 4. Metaweb Technologies: US$42.5 million on December 31

  • 5. Zillow: US$30 million on September 2007

  • 6. Metacafe: US$30 million on August 16

  • 7. n2N Commerce: US$30 million on January 31

  • 8. Veoh Networks: US$25 million on August 31

  • 9. MyStrands: US$25 million on April 11

  • 10. Reunion.com: US$25 million on May 21

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jon Brodkin

Network World
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?