Web 2.0 still getting the bucks, from investors

Last Friday, I had coffee with a VC. His focus is on the consumer Internet market and has made a variety of investments in the Web 2.0 space. He said to me: "I'm looking for Web 3.0 investments."

What's that? He really didn't give a good explanation. Basically, he said Web 3.0 is making-up for the problems of Web 2.0.

A report from Ernst & Young and Dow Jones VentureOne has some numbers on it. That is, in 2006, there were $850 million in Web 2.0 investments in 167 companies. This is double the results in 2005. The big investors in the category include Benchmark Capital, Draper Fisher Jurvetson, Sequoia Capital and Omidyar Network.

The study defines a Web 2.0 company as one that has a business model "that revolves around a dynamic interface facilitating participation through such methods as user-created content, networking, and collaboration."

Business model? I'm pretty sure most of the companies aren't making much money. Even the poster child of Web 2.0, YouTube, is not cranking in the cash.

Maybe we'll need to wait for Web 3.0 for that.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.