PRINT THIS PAGE Web 2.0 venture capital investment activity goes global19/09/2007. Source: AltAssets. 
Venture capital investment in Web 2.0 companies, until recently pretty much limited to the San Francisco Bay area, has expanded into other parts of the US and into Europe and Israel, according to Dow Jones VentureOne and Ernst & Young. Investors directed at least $464.2m into 101 deals worldwide in the first half of the year, the highest half-year total on record for the sector and up from the $431.5m invested across 89 deals in the same period in 2006 and the $463.3m across 94 deals invested in H2 2006, according to the report.
The increase in the amount invested and in the number of deals was entirely attributable to a rising interest in Web 2.0 in Europe and Israel, as the capital invested in the US declined to $356.9m (67 deals) in H1 2007 from $363.15m (65 deals) in the first half of 2006, but increased from the $346m (69 deals) invested in H2 2006.
In Europe, there were $51.5m (20 deals) invested in H1 2007, up from $24.6m (11 deals) in H1 2006 but down from the $78.2m (13 deals) invested in H2 2006.
Israeli Web 2.0 companies had their best showing to date, raising $15m in five deals in the first half, up from two deals and $5m invested in all of 2006, the research found.
Dow Jones VentureOne's director of global research Jessica Canning said, 'The blockbuster growth of Web 2.0 technologies has impacted every sector in the US from media to retail to hospitality and consumer products.
'But we may be seeing a plateau in the number of Web 2.0 companies investors are willing to back in the US - at least until a clear liquidity market arises. In the meantime, more investors are turning to Web 2.0 plays in emerging markets in Europe,' Canning added. 'From 2002 to 2006, literally 40 per cent of all Web 2.0 deals were located in the Bay Area. But in the first six months of this year, that figure dropped to just 20 per cent and seems to be related to the presence of fresh investor blood in the space.'
The US region that saw the biggest pick-up at the expense of the Bay Area in the first half of 2007 was New England, which saw $102m invested in ten Web 2.0 deals. That is 65 per cent more than what was invested in 12 New England Web 2.0 deals in all of 2006, and slightly more than what was invested in Bay Area companies in the first half of this year.
Another region to see a surge in investor interest was Southern California, as venture capitalists put $59m to work in eight Web 2.0 deals in this region.
The median size of a Web 2.0 deal on a global basis was $4.6m in the first six months. For US deals, the median round size reached $5.2m in the first half, the highest figure on record. The most active investors in Web 2.0 on a worldwide basis so far this year are Sequoia Capital and Draper Fisher Jurvetson.
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