Web 2.0 investment has peaked in the US and is now being led by Europe and Israel, according to research by Dow Jones (NYSE: DJ) VentureOne and Ernst & Young. In the first half of the year, there were 67 US investments in what the pair term “Web 2.0” companies, totaling $357 million (£178.62 million), but this was virtually unchanged from last year. In contrast, European deals roughly doubled on the same period last year to 20, totaling $52 million (£26 million) – and the UK is leading the continent with seven deals, totaling $22 million (£11 million). France is also strong, five deals worth $16 million in the half (£8 million), with Belgium, Ireland and Holland each closing their first Web 2.0 deals in the period.
VentureOne research director Jessica Canning, in a release, notes that the San Francisco Bay Area – so often a hub of innovation – accounted for 40 percent of all Web 2.0 investments between 2002 and 2006 (did “Web 2.0” exist in 2002?), but now makes up just 20 percent: “It seems many longtime stalwart Web 2.0 investors 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.” Indeed, top tech investors like Benchmark Capital, Omidyar Network, Kleiner Perkins Caufield & Byers and Storm have all invested in fewer web outfits so far this year; in the US, New England is now buzzing with more deals.
Overall, though, $464.2 million (£232.2 million) has gone in to 101 such investments around the world so far this year – 14 percent more deals than lat year. While Israel only clocked two deals, worth $5 million (£2.5 million), in the whole of 2006, in the first half of 2007 it raised $15 million in five deals.