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Social Media Venture Funding Surging

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Venture capital (VC) funding of social media companies reached $2.23 billion in the second quarter of 2011, roughly 3.5 times the $643 million raised by social media companies one year earlier, according to a report by Wedbush Securities. Group-buying companies received the largest outlays during the quarter, led by LivingSocial, 55tuan, and Coupons.com. 

The second-quarter results were slightly below the $3.17 billion raised by social media companies in the previous quarter. But  1Q11 results were inflated by the $1.5 billion Facebook raise in January, as well as a $950 million raise by Groupon.

Below, other findings from Wedbush Securities' report titled, "The Second Internet."

Among other results from the second quarter of 2011:

  • The largest deals were social-commerce related, led by LivingSocial (raising $410 million), 55tuan ($200 million), Coupons.com ($200 million), and Gilt Groupe ($138 million).
  • Social gaming companies raised a total of $217 million, up from $96 million in 1Q11.
  • Buoyed by a $90 million investment in Wimdu, social travel companies raised $94.5 million, up from $2.0 million in 1Q11.

Below, a list of second-quarter social media investments that exceeded $50 million, which together amounted to $1.5 billion—or roughly 68% of total amount ($2.3 billion) raised in the quarter:


After excluding raises of $100 million or larger, average deal size for second quarter was $10.8 million, up from $8.1 million in the previous quarter.


Looking for great digital marketing data? MarketingProfs reviewed hundreds of research sources to create our most recent Digital Marketing Factbook (May 2010), a 296-page compilation of data and 254 charts, covering email marketing, social media, search engine marketing, e-commerce, and mobile marketing. Also check out The State of Social Media Marketing, a 240-page original research report from MarketingProfs.


The future looks just as bright. Even given such financial hyper-activity, emerging social companies, or "Second Internet" ventures are changing the world to a far greater extent than Wall Street currently appreciates, Wedbush notes.

For the foreseeable future, the financial activity related to Second Internet companies will likely be very positive.

About the data: Findings are based on research conducted by Wedbush Securities.


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  • by SpencerBroome Mon Jul 11, 2011 via web

    Interesting that "deal" sites are receiving some of the most investment. Doesn't seem sustainable unless they keep growing customers, which has to slow at some point.

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