New England Ranks #1 in Web 2.0 Investments
September 20th, 2007 by John Lawrence
With the continued media attention given to Web 2.0 investments, we thought now would be a good time for a follow-up post to our original entry on the promising future of Web 2.0 companies.
There was a recent Wall Street Journal article highlighting the nation’s biggest Web 2.0 investment hot beds. New England was named the biggest market for Web 2.0 deals in the first half of 2007, topping the 2006 frontrunner, San Francisco. According to data from Dow Jones VentureOne and Ernst & Young, New England venture capitalists invested $102 million into Web 2.0 companies in 10 deals. This is a lot in six months, especially when you realize that New England only invested $62 million, over 12 deals, in Web 2.0 start-ups in all of 2006.
The underlying message to these telling statistics is that social media, online video, and blogs are powerful forces that individuals as well as enterprises and the media are actively incorporating into their personal and business lives. There is no shortage of Web 2.0 opportunities to invest in and I would anticipate New Engalnd, as well as the Valley, will continue to invest huge sums of money into the space. Care must also be taken to avoid over investment in technologies that have no real underlying market. There is significnat competition for both “eye ball” time and corporate dollars. Having a thorough understanding of the market nuances is extremely important. Factors that we all (entrepreneurs and investors) must consider include (but certainly not limited to): potential market size; timing of market readiness; likely product and service strategies; company differentiators and barriers to entry; competition and competitive challenges; and of course revenue models. The best companies address these factors early which go a long way to helping a company gain that early market lead.
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