Software and Web Apps Still Sweet Spot For Investing

In an investment slump, that is still recovering from the 2008/2009 low-point, web apps and software are continuing to be money makers for investors. Web apps and software, specifically for the myriad social media sites, are dominating the investment pool right now with continued profits and growth even in today’s lackluster economy. The article below provides specific details and figures to illuminate how well this section of investing is doing.
By  Jolie O’Dell

As overall VC numbers leveled off in the second quarter, web apps and software continued to be sweet spots for investment through the first half of 2011.

According to data from Dow Jones, even as other sectors slumped, software, including downloadable and boxed applications as well as web-based apps, showed strong signs of recovery from the late-2008/2009 investment nosedive. And the consumer information services sector, which includes all consumer-facing websites, apps and services, had a strong quarter, as well.

In combination, software and consumer web companies raised $2.66 billion in a total of 281 deals.

The consumer information services sector also includes social media web apps. This particular category received a larger amount of funding and a smaller number of deals year-over-year, raising 25% more capital than in Q2 2010.

And a Dow Jones rep confirmed to VentureBeat that mammoth rounds such as a $565 million round for local deals service LivingSocial and a $138 million round for luxury-brand deals site Gilt Groupe aren’t necessarily driving up the median for the whole sector.

In a statement, Dow Jones VentureWire editor Scott Austin said of the consumer services category (which is 70% web apps), “The median round size for [these] deals is creeping up, which means it’s no longer just a few abnormally large funding rounds driving up investment levels. The wealth is being spread to companies across the industry.”

Over the past two years, the median dollar amount for funding deals in consumer services has ranged between $2.5 and $3.5 million. However, in Q2, the median round size rose to $4.7 million for that category.

Read more http://venturebeat.com/2011/07/22/venture-capital-q2-2011/

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