Web. 2.0 investment goes global

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) September 19, 2007 -- Data compiled by Dow Jones VentureOne and Ernst & Young comparing the first half of 2007 with the recent past showed a regional shift "at the expense of the Bay Area." Still, greater Silicon Valley remained the busiest region in the period, with 25 deals attracting $91 million in investments.

The term Web 2.0 generally refers to maturation of the Internet as a commercial platform. "We may be seeing a plateau in the number of Web 2.0 companies investors are willing to back in the U.S. - at least until a clear liquidity market arises," said Jessica Canning, global research director for Dow Jones VentureOne.

From 2002 to 2006, the greater Silicon Valley dominated entrepreneurial activity in Internet-based commerce, accounting for 40 percent of global investments. But it dropped to 20 percent in the first half of 2007.

The drop "seems to be related to the presence of fresh investor blood in the space," Canning said in a press release. "It seems many longtime stalwart Web 2.0 investments have filled their portfolios with Bay Area companies and are stepping aside, giving new investors opportunity to scour for promising deals in less-saturated regions."

Several Sand Hill Road firms have recently de-emphasized the sector. Benchmark Capital, for example, participated in 16 Web 2.0 deals in 2006, many based near its Menlo Park home, the report noted. In the first half of 2007, it had funded three such deals, only one in the Bay Area. Other valley VCs show a similar pattern.

New England start-ups outpaced the Bay Area in terms of dollars raised, with $102 million invested in 10 Web 2.0 deals. That was a 65 percent increase in dollars over all of 2006 for the region. Web 2.0 investments in Southern California and New York were on pace to set new highs for the regions, the report found.

Globally, the report showed a generally bullish posture: $464.2 million was invested in 101 deals in the first half of 2007, a 7 percent increase in dollars and a 14 percent increase in deals, compared with the first half of 2006.

All of the growth was attributable to Europe and Israel, while activity in China slipped slightly. The overall investment within the United States was "virtually unchanged," with $357 million invested in 67 deals.

Data showed that $52 million was invested in 20 European ventures, roughly doubling the activity from the first half of 2006. Israeli Web 2.0 companies raised $15 million in five deals, up from $5 million in two deals in all of 2006.

China reported $41 million in nine Web 2.0 deals, down from $43 million in 12 deals during the first half of 2006.

Author: Scott Duke Harris
Source: http://www.mercurynews.com/

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