Fewer VCs Eye Social Media Investments
August 22, 2013
Some would say it was inevitable. Bloomberg Businessweek tells us that “The Social Media Bubble is Quietly Deflating.” After a rapid ascent to the remarkable point of capturing over 20 percent of internet-centered venture capital funding in 2011, the field has seen investments dwindle drastically. Reporter Joshua Brusetin informs us:
“Social media companies drew only 2 percent of the venture capital headed to Internet-based enterprises last quarter, according to data published on Tuesday by CB Insights, a research firm that tracks venture-capital investment. In the two-year stretch that ended in the middle of 2012, social media companies took in at least 6 percent of overall venture capital invested in Internet companies each quarter. But for three of the last four quarters, those social startups have brought in 2 percent or less (with the outlier quarter largely the result of a huge investment in Pinterest earlier this year). The peak came in the third quarter of 2011, when social companies led by Twitter took in 21 percent of the total $3.8 billion in Internet deals by venture capital firms.”
Fortunately, the slide has been more gradual than, say, the collapse of the Internet bubble of the 1990s. It is important to note that, though the social media fervor may be receding, overall investment in internet companies remains around 2011 levels. What is turning investors’ heads now? Why, big data and the cloud, of course. We shall see how long that bubble floats.
Cynthia Murrell, August 22, 2013
Sponsored by ArnoldIT.com, developer of Augmentext
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