Unless you have been living under a rock, you probably know that private equity and venture capital firms have been pouring cash into social networks like it was their job (and apparently, it is). Until recently, however, it was hard to get a handle on just how much money was being invested in social media startups. That's no longer the case, thanks to a research outfit called Social Media Influence, which just released the SMI Guide to Social Media Funding.
$2.52 billion: that's how much venture capitalists and private equity investors plowed into social media companies in the first quarter of 2011, according to SMI, including $1.6 billion in social networks. Turning to other categories, SMI tallied $65.6 million in funding for social gaming; $420.2 million for social commerce; $110 million for social business; $62.6 million for social data analytics; $109.2 million for social marketing; and $146.1 million for social apps and tools.
In terms of specific companies, Facebook dominated the market with $1.5 billion in funding, accounting for the bulk of the "social network" category, but that still leaves another billion floating around for other companies. Altogether, aside from Facebook VCs closed a total of 55 funding deals in the first quarter, ranging from $377 million for Groupon down to a mere $1 million for Backtype.com. Some of the other big winners were Rovio, with $42 million in VC funding; Color, with $41 million; and Hubspot, with $32 million.
Writing in Ad Age, Bernhard Warner of Custom Communication and Social Media Influence pointed out that the $2.52 billion figure is especially impressive when you consider that total VC funding for all private firms in the first quarter came to $5.9 billion, meaning social media accounted for about 43% of all VC funding in this period. Warner also revealed that the second quarter is off to an equally rip-roaring start, with April bringing $1.35 billion in social media VC deals.
COMMENTARY: In a comprehensive review of the VC transactions in Q1 2011, we identified each investment made in a company we classified as a Social Media focused company.
VC funding of Social Media companies rocketed to $2.18 billion in Q1, surpassing the $1.6 billion raised by Social Media companies for full-year 2010. This surge was driven by the $1.5 billion financing round in Facebook by DST and Goldman Sachs in January.
Excluding the Facebook round, average deal size for the quarter was $8.1 million, down from $14.4 million in Q4, and in line with the 2010 average of $8.3 million. The two largest deals in Q4 2010 were the $183-million raise by LivingSocial and the $200-million raise by Twitter. Excluding those two deals, average round size in Q4 2010 was $7.9 million.
Below is a list of the 10 largest Social Media investments in the first quarter, which totaled $1.79 billion. The 10 largest transactions equaled 82% of the total amount raised in the quarter.
Below we detail the data from Q1 2011. If you have or know of a company that was left off the list please let us know by writing to us at privateshares@wedbush.com. We apologize ahead time for any misclassifications, and will be updating the data in future publications.
Once again, we look forward to hearing from the community to help us make the data as correct as possible. In addition, we look forward to hearing from the community with regards to future financings. While we acknowledge the data presented here may be imperfect, we believe it is directionally correct, and we feel it’s important to put a stake in the ground and highlight how rapidly the VC landscape is adjusting to the evolving Social Media landscape:
Courtesy of an article dated June 24, 2011 appearing in MedPost Publications The Social Graf and an article dated April 27, 2011 appearing in SharesPost
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