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The venture capitalist's Web 2.0 list



Venture capitalists are going nutty over Web 2.0 companies, pouring $870 million into these companies during the first three months of the year, up from $786 million the quarter before, according to a new study by PricewaterhouseCoopers and the National Venture Capital Association.

Here is a list of all Web 2.0 companies that received venture backing. Download the list here; note the tabs at the bottom, which show all 2005 fundings, and then 2006 Q1. Scroll to right to see the funding amounts, etc. (Hat-tip to PwC for sending it on.)

However, you'll see PwC defines Web 2.0 companies broadly. Their survey includes non-consumer companies, such as San Francisco's Riverbed and Palo Alto-based Netli, two network infrastructure companies that many people wouldn't associate with Web 2.0, but which PwC and NVCA included because they help facilitate the Web 2.0 experience, according to Tracy Lefteroff, the global managing partner of PwC's venture capital practice.

Tracy said the next step for PwC is to try to separate the Web 2.0 consumers companies from those that are more back-end, something they may do next quarter. (Judging from the critiques of the list in comments so far, they may want to do this sooner rather than later).

Seven of the top 10 Web 2.0 deals were in Silicon Valley, according to the data, a high proportion that is eerily reminiscent of Silicon Valley's hot affair with dot-com companies in the late 1990s.

"People are trying to contrast this with the Internet bubble, and want to know if we're getting in the same risk category we saw developing in late 1999, early 2000," Tracy told us.

"You always run that risk, but I still don't see the frenzy to invest in these companies that we saw in the late 1990s."

(Update: We think this is a great first-stab, but would like to help PwC make this list better. If your company is not on the list, and you'd like it to be, please leave info in comments. Or, if you are sensitive about the information, just email us at matt.siliconbeat at gmail dot com with VCW2O in the subject line and tell us under what circumstances we can use it (i.e., we can use the company's name, and mention that it has raised seed funding, but we can't list the exact amount, etc). Please leave as much info as possible, following the column headings given in the spreadsheet -- scroll right to see the full headings. Note that PwC has put "confidential" for those companies that have requested anonymity on particular data. We'll do same.)

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This list is ridiculous. Web 2.0 is an investment fad, for sure, but this classification is pointless in its generality. Netli is a great case in point. We've been in Netli since 2002, well before "Web 2.0" was a marketing meme. Netli has Global 2000 customers who want high performance, secure access to their web sites all from over the world. Their customers are Dell, HP, etc., not exactly "web 2.0 companies". Last I checked Dell had a revenue model (today's earnings warning notwithstanding.)

Service infrastructure isn't Web 2.0 any more than is semiconductor.

Peter Rip on July 21, 2006 8:53 PM
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Peter, I agree that there a lot of problems. At the least, though, it is transparent, and in those columns on the right explain what the companies do. Has anyone seen a better VC-Web 2.0 list?

Matt Marshall on July 21, 2006 9:20 PM
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I completely agree with Peter - this is an awful list. It doesn't look like PWC bothered to run it by anyone that actually invests in these types of companies to help them with their classification. Just scanning the 2005 I could throw out at least 25% of the companies without doing any real thinking. Plus - I searched for a handful that I know of that didn't appear on the list.

As a result, I'd say the macro numbers - which appears to be the point of the list (or at least the article - ala your first paragraph) is massively overstated.

Brad Feld on July 22, 2006 12:35 AM
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To be fair, you'll get a different definition of web 2.0 from every 'expert' you talk to. "New stuff to do with the internet" seems to be the working definition here. I'm grateful to have all the information, even if the totals may be misleading.

Good work, Matt.

Ian Delaney on July 22, 2006 1:59 AM
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Btw, I gave PwC a hard time about it too. Re "overstated," you should see their "Web 2.0" investment numbers for first quarter of 2002. They say more money was invested back then than during the most recent quarter of 2006. Now 2002 was before the term Web 2.0 was coined, and back before good old Friendster kicked things off. I told them they have serious methodology questions. Their response was that Web 2.0 includes the new wave of back-end infrastructure technologies which began getting funded after the Internet bubble burst, and which allowed the consumer stuff to thrive -- and that's why 2002 was so big. I asked for a breakdown of the 2002 companies, which I haven't seen yet. I told them they should separate the consumer companies from the back-end stuff, and produce two lists. They said their next step is to do just that (which I explain the extended entry; hope you saw).

Matt Marshall on July 22, 2006 7:05 AM
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Folks, if your company is not on the list, and you'd like it to be, please leave info in comments. Or, if you are sensitive about the information, just email us at mmarshall at mercurynews dot com with VCW2O in the subject line and tell us under what circumstances we can use it (i.e., we can use the company's name, and mention that it has raised seed funding, but we can't list the exact amount, etc). Note that PwC has put "confidential" for those companies that have requested anonymity on particular data. We'd do same.

Matt Marshall on July 22, 2006 9:27 AM
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they should rename this to "investing cycle 2.0", cause that's what they are really trying to do. After five years of reduced VC investment activity, it appears that the cycle is again turning up, and PwC is trying to report that - it's just disappointing that they felt they had to try to ride the hype wave by calling it "Web 2.0".

George on July 23, 2006 12:36 AM
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I chomped on this data and am familiar with many of the companies, aside from what Peter and Brad have already said about the list itself I think this offers some compelling statistics that back up the notion that there is a lot of diversity in the startup ecosystem and on the VC side. Diversity not just from the standpoint of software sector, but also investment stage and geography as well. If you compared this list against Q1 2000 the differences would be stark.

PWC needs to go back to the drawing board to make Moneytree more relevant, and I'd even lump VentureSource in with them on that point.

Jeff Nolan on July 23, 2006 6:47 PM
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What's with the crazy geographic groupings? Is it stupidity or some type of purposeful slight that puts "San Fran/Berkeley" within "Silicon Valley?"

Berkeley is not part of any large census designation nor are their any companies on the list that are located in Berkeley. Oakland has about 4x the population of Berkeley and is the proper designator.

Dan on July 24, 2006 3:58 PM
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I agree with George. This is an interesting list and it's great to see the injection of venture capital into the Internet and technology sectors but this is hardly a web 2.0 specific list. Good marketing by PWC though...we're all reading the list looking for our favorite web 2.0 companies and some others we haven't discovered yet.

Peter Glyman on July 26, 2006 5:04 AM
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The Daily Telegraph(in the UK) noted a complete UK venture-backed report thats been published by Library House, based in Cambridge, UK.

It covers all UK venture-backed companies, so by default should cover any and every web 2.0-like company...

report @ www.libraryhouse.net/ukvb/

PeterC on August 1, 2006 6:34 AM
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Very interesting list, allthough i dont see ORCA Desktop in there - maby someone would add it.

Our website is www.orcadesktop.com - and for those who feel in a playfull mood, try www.orcadesktop.com/proton

.. and a small desc.

ORCA is an online system designed to resemble any standard PC desktop while making it accessible from anywhere in the world. It is designed to reduce costs, improve productivity, and enable users to work mobility-centric.

We have not asked for VC yet, but maby time has come.

Leon Bollerup

Leon Bollerup on August 14, 2006 1:44 AM
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