Thursday, February 15, 2007
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Created by: Tornado Staff
Internet funding back on track
Following 4 poor years starting in 2002, Internet companies are back in favor among Europe's venture capitalists. The hype surrounding Web 2.0 and a number of high-profile exits have boosted investor confidence. Then again, others may be afraid to miss the boat. An indication of this could be the high number of apparent me-too investments in the past year, similar to the follow-the-herd trend during the Bubble. On the other hand, simultaneous VC investments in more or less competitive companies are typically abundant in the Internet space compared to other industries.
2006 showed increased investment activity in Internet companies as they pulled in 9% of all capital invested in Europe and Israel – up from 4% in 2005. In 2002 and 2003 less than 3% of total funding went to these companies – down from the 2001 peak of 14%. So far, 2007 also looks even rosier. 20 investments have already taken place, raking in 11% of total technology funding.
February alone saw 4 first funding rounds in Internet companies: German telfish provides online mobile subscription fee search and switch service. Another German company, zweitgeist, enables a virtual presence on the Internet. Switzerland-based plazes provides a Web service for geo-social navigation. 24h00 of France is an online retailer of branded clothing through private and event-driven sales. A similar French deal (AchatVIP.com) was closed earlier in the year. Other disciplines of Internet companies that reported multiple investments in the past few months include social networks, blogs, user interfaces, opinions and reviews, web analytics and online storage providers.
Benchmark Capital, NewMedia Spark and High-Tech Gründerfonds announced 2 investments in European Internet companies this year. Benchmark Capital was also among the most active investors in that category in 2006 with 6 investments. Only Index Ventures had more Internet deals, namely 8.
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