According to data released by Ernst & Young and Dow Jones VentureOne, $844.4 million, 167 deals were invested in web 2.0 start ups last year, more than twice as much money and nearly twice as many deals as in 2005. However, this is only a fraction of total venture capital deals in 2006 which totalled 25.5 billion, mainly in life sciences.

From these data, there are two questions: is there a future for web 2.0 companies? or just another dot com bubble? what kind of value can web 2 created? Does this small investments mean a small future returns?

First, the median valuation for a Web 2.0 company in 2006 was $6 million only ca 1/3 of all US venture capital backed companies. Second, the investments on web 2. were based a strict research methodology especially a solid business model. From these, it did not appear that web 2.0 is a bubble.

As a life science researcher, i know that life science is different from web 2.0 which require far more investments on infrastructure, R&D, and also with extremely risk. Currently, it takes ca 500-800 million and 15 years to discover and develop a new drug. and only a fraction of drugs, which sale over 200 million dollars per year can recover this investments.

On the other hand, web 2.0 requires far less investments and it costs much less than 10 years ago to set a website. There is no need to build own server and many web design, etc service can be contracted out with on a need base.

Then, how much value can web 2.0 created? I have no idea. But i like to put all my photos in smugmug and back up all my pictures over there so that all of my friends can view them. I like to use wordpress to set my own web page and put all my favorite websites in one place and it is so easy for me to use them. I like to google custom search engine to set my own search engine since the results will be much easy for me to check.

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