According to a recent report by Petsky and Prunier (an investment bank), VCs and investors have dropped around in 1.5 billion dollars into social networks and $760 million in ad networks. Not bad eh? The hottest space within social media appears to be user generated content a.k.a. sites like Youtube (just an example). In fact this space has seen an increase of 300% in investment as compared to the previous year. This space is so attractive because of its continued evolution and growth. You would think that we already have a fair amount of user generated content sites out there. However, from an investor’s perspective, if the user generated space keeps growing, then why not keep investing in it?
Ad networks are also seeing rapid growth, not a huge surprise since most of the companies in the social media space are generating revenue primarily through advertisements. There is definitely a strong correlation between the number of ad networks and the number of companies being created in the social media space. Petsky and Prunier does raise the question of how over 150 ad networks can coexist as the marketplace becomes more and more crowded. The answer is fairly straightforward some ad networks will go bust and the others will begin consolidating.
Unfortunately, the mobile sector has not been seeing the same type of enthusiastic investment as user generated content and ad networks. According to Petsky and Prunier only around 80 million dollars have been directed toward the mobile sector, down from a whopping 291 million last year. But, as Petsky and Prunier mention, the mobile infrastructure is just not there yet, and I completely agree. Mobile has received a lot of hype during the past couple of years but nothing has really emerged. There are definitely a lot of possibilities in the emerging mobile space; however, without an infrastructure to support everything on the back end, it’s just not going to happen, not yet anyway.
Keep in mind that this information is from the Petsky and Prunier company and their investment holdings. What do you think of the investment choices of Petsky and Prunier? Where would you put your money? Does mobile have a future?
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