Rutberg & Company has reviewed and analyzed the venture capital activity for the digital media sector in 2006. Their key takeaways include:
- Venture financings in digital media totaled $4.4 billion in 2006, as compared to $2.6 billion in 2005. The 2006 growth rate of 66 percent far exceeds the growth rates for the overall venture industry. Notably, though, the growth in venture financings for digital media has moderated over the past six months.
- The curbed growth of investment activity is consistent with Rutberg's conversations with venture capital investors. On an anecdotal basis, they believe that investor sentiment is becoming more rational rather than exuberant, as was seen in the beginning of the year.
- The percentage of transactions with a financing size of $20 million or greater has increased, from 6 percent in 1H05 to 13 percent in 2H06. These larger transactions are driven, in Rutberg's view, by activity in the capital-intensive Semiconductors sector and in the late-stage Advertising Infrastructure sector.
- The sector with the greatest increase in 2006 was Provisioning & Delivery Infrastructure, driven by both an individual $130 million financing by Limelight Networks and the overall investment growth in the CDN and Internet-delivered video infrastructure subsectors. Strong increases were also experienced in the Advertising Infrastructure and Applications sectors.
- The most active digital media venture capital investors during 2006 included: Intel Capital, Sequoia Capital, Draper Fisher Jurvetson, Benchmark Capital, Menlo Ventures, and Oak Investment Partners.
- Venture financings in digital media totaled $4.4 billion in 2006, as compared to $2.6 billion in 2005. The 2006 growth rate of 66 percent far exceeds the growth rates for the overall venture industry. Notably, though, the growth in venture financings for digital media has moderated over the past six months.
- The curbed growth of investment activity is consistent with Rutberg's conversations with venture capital investors. On an anecdotal basis, they believe that investor sentiment is becoming more rational rather than exuberant, as was seen in the beginning of the year.
- The percentage of transactions with a financing size of $20 million or greater has increased, from 6 percent in 1H05 to 13 percent in 2H06. These larger transactions are driven, in Rutberg's view, by activity in the capital-intensive Semiconductors sector and in the late-stage Advertising Infrastructure sector.
- The sector with the greatest increase in 2006 was Provisioning & Delivery Infrastructure, driven by both an individual $130 million financing by Limelight Networks and the overall investment growth in the CDN and Internet-delivered video infrastructure subsectors. Strong increases were also experienced in the Advertising Infrastructure and Applications sectors.
- The most active digital media venture capital investors during 2006 included: Intel Capital, Sequoia Capital, Draper Fisher Jurvetson, Benchmark Capital, Menlo Ventures, and Oak Investment Partners.