The venture capital industry is getting hammered by the stock market collapse. IPOs are choked off, and the M&A market is sick, too. Worse, advertising dollars are shrinking just as a whole generation of Web 2.0 companies expecting to live on “advertising” need to start generating revenue.
So VCs were idiots to dump all that money into flaky Web 2.0 companies, right?
Actually, no–because, believe it or not, they didn’t really put that much money into them.
We’ve ranked the 20 VC firms most exposed to “Web 2.0” startups, according to data from the VC Experts Key Investment Trends database. (We defined “Web 2.0” as advertising-supported startups founded after Google’s IPO). After scanning this list, you’ll see that even the VC firms that plunked the most money down on the RockYous and Metacafes actually bet very little on the era.
The bottom line: Web 2.0 won’t be a disaster, because investors just didn’t invest that much in it. Why didn’t they? Because Web 2.0 companies just didn’t require much capital.
The top 20 Web 2.0 VC firms combined only invested about $726 million in the sector. Compare that to the recent $2 billion loss a single investment bank sustained in a single quarter (Goldman Sachs). Also compare it to some Web 1.0 companies like WebVan and Exodus, which incinerated billions all by themselves.
Here are the 20 VCs most exposed to Web 2.0. Scroll using the “Next >” buttons on the upper right corner of the posts.