Web 2.0 Venture Investing in 2006 Explodes

There is some new data out on venture investing in Web 2.0 companies during the period 2001 to 2006, and it’s remarkable stuff. According to Dow Jones, venture investing in Web 2.0 companies in 2006 is set to double in dollar terms over 2005; it will amost double in the number of deals done. Even more jaw-dropping is this stat: The total dollars invested in Web 2.0 companies by venture firms in 2006 will be more than the amount in all previous years combined.


There are some caveats, of course. Dow Jones doesn’t detail all the investments that make up this list, so there is no easy way to vet the numbers. Further, my full-year 2006 number comes from annualizing the just-released figure for the first half of 2006. So, caveat emptor.


  1. Hey Paul,
    Very interesting indeed. I’m curious how they define a web2.0 company? Seems like it must be a bit vague at best… also before 2005 were we even sure there was a web2.0 thing going on? Also those this correlate to exits/liqidity events? Do you anticipate 10x in exit vaules in web2.0 companies in the next 2-5 years?
    Would appreciate your insight into this.

  2. When the dot-com bubble burst 5 years ago, friends and family were telling me to take my winnings and get back into law or the family food business.
    My response? “The dot-com bubble may have burst but the internet boom is coming and it will be bigger than anything we’ve ever seen.”
    I actuall pegged 2005 as the year things would recover and never look back. Glad to see these numbers and even more proud to say we stuck it out!

  3. How would you say that squares with this?

  4. I think the number is far too low given the social-media-tech impact. If you estimate that there are about 800 VC and VC-type firms with an average of $50 million each under management that works out to be $40 billion. In the time frame above less than $1 billion was invested in web 2.0 startups which works out to be less than 2.5 percent of all investable monies in the VC funds.