VC investments in Web 2.0 companies booming

I just read this post from Venture Beat. In summary, venture capital investments into “Web 2.0” Internet companies this year are on track to double last year’s levels to about $500 million.

For those of you unfamiliar with Web 2.0, Wikipedia defines it as follows: a supposed second-generation of Internet-based services -- such as social networking sites, wikis, communication tools, and folksonomies -- that let people collaborate and share information online in previously unavailable ways. eBay, craigslist, Wikipedia, del.icio.us, and Skype are common examples of Web 2.0 companies.

Analysts, including myself, think that Web 2.0 is here to stay. The question is whether the space will be overfunded like the dot-com space was a few years back. The good news is that the social and technological advancements associated with Web 2.0 can be leveraged by nearly all firms to give them a marketing advantage. For example, any e-commerce site can now add comment and product review sections which make their sites more valuable.