Levels of VC investment in ‘Web 2.0’ companies doubled last year, according to figures released by Ernst & Young and Dow Jones VentureOne at this week’s Web Ventures Conference in California.

The firms say $844m (£431m) was invested in Web 2.0 startups in 2006, compared to $406m (£206m) in 2005.

The figures refer to worldwide investment, but $682.7m (£346m) of the total was invested in just 126 US deals.

More facts and figures:

  • The US dominates the Web 2.0 space, with 126 of the 167 Web 2.0 deals involving US firms, 83% more than 2005.
  • 20 deals involved European firms in 2006, compared with four in 2005. 
  • $100.5m (£51m) was invested in European Web 2.0 firms, 200% more than in 2005.
  • Seven of the deals involved French firms, with a total of $39.3m (£20m)invested in 2006.
  • Five of the deals involved UK companies, with a total of $23.4m (£11.9m) invested by VCs. 
  • China had 21 Web 2.0 deals – the same number as 2005, with total investment dropping by 26%.
  • The most prolific investors in Web 2.0 worldwide were Benchmark Capital, Draper Fisher Jurvetson, Sequoia Capital, and Omidyar Network.

Ernst and Young reported last December that levels of VC investment were hitting dotcom bubble levels, though Ernst and Young believe that VCs are being more selective than before 2001.

Paul Fisher has also written an excellent round-up of European VC investment in Web 2.0 companies in 2006 on his blog, The Coffee Shops of Mayfair.

Interestingly, his figures do not match Ernst and Young’s - he lists 54 deals involving European Web 2.0 firms, while Ernst and Young mentions only 20.

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