Investors Poured $2.5 Billion Into Social Startups in Q1

From Facebook to Color, Hubstop to Getglue: a Breakdown of Where the VC Money Went

By Published on .

Bernhard Warner
Bernhard Warner

LinkedIn's $9 billion stock market debut last month may have stunned many on Wall Street , but it couldn't have been much of a surprise to the denizens of Sand Hill Road. In the months prior to the LNKD IPO, venture capitalists had been placing huge bets on social networks of all shapes and sizes. In the first quarter of 2011, private equity investors poured a combined $2.5 billion into social startups and a staggering $1.6 billion into social networks alone, as our new piece of research - The SMI Guide to Social Media Funding - shows.

Q1 Social Funding Breakdown chart
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The social networks sector wasn't the only high-flyer. Investments in apps-makers (12 deals in Q1) and social marketing specialists (9 deals) were (and still are) in high demand. VCs closed 56 funding deals of "social" companies between January and March, totaling a combined $2.52 billion. The largest of Q1 was – surprise, surprise – Facebook's $1.5 billion funding round in January; the smallest was a $1 million to Backtype.com.

To put this into further perspective, VC funding for all privately held firms in the U.S. in Q1 amounted to $5.9 billion, according to the PriceWaterhouseCoopers Money Tree report, showing how large social looms in the investment world these days. In short, social had a very good quarter, and it was off to an equally good start for Q2. The same report tallied $1.35 billion in social media VC deals in April alone.

The SMI Guide to Social Media Funding breaks up the social media universe into seven categories:

  • Social networks
  • Social Commerce
  • Apps & Tools
  • Social Business
  • Social/Digital Marketing
  • Social Gaming
  • Data Analytics

We've drilled down to explore each sector, pointing out which social media investment trends are hot with investors right now and which companies are hot in those sectors.

If you fancy delving into where the VCs are putting their money when it comes to the social media business, you can download the full free report here: http://socialmediainfluence.com/SMI-social-media-funding/

ABOUT THE AUTHOR
Bernhard Warner is a director at the editorial consultancy Custom Communication and is co-founder of Social Media Influence. He tweets at @socialinfluence and at @bernhardwarner.
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