In a comprehensive review of the thousands of VC transactions in 2010, we attempted to identify each investment that was made in a company we considered to be a Social Media focused company. We then looked at each of those Social Media companies, and tried to identify each company that was, or will be, generating the majority of its revenue from the Facebook platform. If you have a company that was left off the list or mis-classified in any way (timing of investment, lead VC, amount, description…), please let us know by writing us at firstname.lastname@example.org. We apologize ahead time for any mis-classifications, and will be updating the data in future publications.
VC funding of Social Media companies soared to $819mm in Q4, almost equaling the $856 million that was raised by Social Media companies in first nine months of 2010. Total funding for the year reaches $1.67 billion.
The surge in Social Media company financing was driven by the average deal size, which reached $14.4 million in Q4, vs. the $5.9 million average investment during the first nine months. The surge in average deal size in Q4 was helped by the $200 million investment in Twitter. However, even excluding the Twitter investment from the analysis, the average deal size still would have been $11 million in Q4, still almost doubling the average deal size of the first nine months. And Twitter was not even the largest deal of the year, given the $300 million raised by Zynga in the second quarter. Below is a list of the 10 largest Social Media investments in 2010, which totaled $906 million, an average of $90 million. The 10 largest transactions equaled 54% of the total amount raised in the 202 Social Media investments made by VCs in 2010. Interestingly, 8 of the 10 largest fundings of 2010 took place in the fourth quarter.
We estimate that of the total $1.67B raised by social media companies in 2010, $619 million, or 30% of the total Social Media investments in 2010, was invested in companies whose primary business is leveraging the Facebook platform.
The second quarter figures in the chart above were skewed by the $300 million investment in Zynga, without which, the total amount raised by Facebook focused companies in the 4th quarter would have almost equaled the total amount raised in the first three quarters.
The chart below looks at the data by VCs, ranking them in terms of total amounts raised by deals in which they were identified as the lead.
In the following pages, we detail the data behind the charts above. Once again, we look forward to hearing from the community to help us make the data as correct as possible. In addition, we look forward to hearing from the community with regards to future financings. While we recognize the data presented here is imperfect, we’re very confident it is directionally correct, and we feel it’s important to put a stake in the ground and highlight how rapidly the VC landscape is adjusting to the evolving Social Media landscape.