Social Marketing Strategies from Social Marketing Expert Peter Lenkefi

Promising Web 2.0 ventures received almost half a billion dollars in investment worldwide for the first six months of 2007, suggest reports, with Europe and Israel leading the investments.

Reports from Dow Jones VentureOne and Ernst & Young recorded that emerging Web 2.0 companies received a record $464.2 million in the first half of 2007, up 7 percent on the same period of the previous year. Europe and Israel lead the investments.

The European Web 2.0 industry effectively doubled its investments, receiving $52 million from 20 investments. Israel received $15 million from 5 deals, a sharp contrast to the $5 million 2 deal investment the previous year.

However, there was not such fortune for US Web 2.0 industries. The lack of a “clear liquidity market” as indicated by Dow Jones VentureOne director, Jessica Canning, effectively stifled Web 2.0 investment in the US.

As a result “investors are turning to Web 2.0 plays in emerging markets in Europe” she said.

Despite the obvious unease in US Web 2.0 investments, US start-ups bough in 77% of investments, equivalent to $357 million.

Although the number of investments in China declined, from 12 deals in the same period in 2006 to 9 deals in the same period in 2007, the actual investment in 2007 almost remained stable to that of 2006 with $41.2 million raised in the first half of 2007 as opposed to the $43.3 million raised in the same period in 2006.

Web 2.0 investment leaders in 2006, Benchmark King, with 14 deals worldwide with 11 alone in the US, was replaced in 2007 with Sequoia Capital. Sequoia accomplished 6 deals worldwide, with 5 in the US.

Drapher Fisher was one deal behind in each category. Village Ventures and Lightspeed Venture Partners then followed with 4 deals each. Benchmark King was not listed among the top deal makers in the US. Top dealmakers in Europe included Big Bang Ventures, Bright Stations Internet Ventures and NewMedia SPARK, all with two deals.

Worryingly top venture capital regions, the California’s Bay Area, the New York Metro area, the Mid-Atlantic region and Texas were on pace to see a decline in Web 2.0 investment in 2007.

The California Bay Area has received a paltry $90.5 million in the first half of 2007, increasing fears it would not even receive half the $413.7 million it has received in investments for the whole of 2006.

However this was counter-acted in the New England region, where the first half of 2007 investment has already exceed the whole investment of 2006 by $40 million, from $102 million compared to $62 million.

Other areas than were expected to exceed the investment total of 2006 included Southern California and Research Triangle, North Carolina.

The big movers and shakers in Europe were England and France, who had received $21.8 million and $15.9 from 7 and 5 deals respectively.

Possibly the biggest deal in Europe involved N2N Commerce, an English based Web 2.0 company, who received a $30 million dollar investment and in the US, Zillow, a provider of online property tools who received $25 million in funding.