Funding for New Social Media Ideas – So 2011?
July 20th, 2013 by Eric Frye
According to Bloomberg Businessweek, the social media bubble is bursting. From Wall Street trading to closed-doors corporate funding, investors have begun turning a cold shoulder to the inventors of tomorrow’s social sharing networks.
In fact, corporate investment in social media (in networks such as Facebook and Pinterest, the funding of apps, etc.), has steadily declined from its high point in late 2011.
According to Businessweek‘s Ashlee Vance: “Silicon Valley is reaching the saturation point with business plans that hinge on crossed fingers as much as anything else.”
“We are certainly in another bubble,” says Matthew Cowan, co-founder of the tech investment firm Bridgescale Partners. “And it’s being driven by social media and consumer-oriented applications.”
Is this the pending death of social media? Read all the gory details here >>
To provide a bit of Upright analysis:
The monetization of the actual social media platforms is obviously crucial here. When General Motors quit spending ad dollars on Facebook in May 2012, investors began to wonder: “if the all-powerful Facebook can’t make money (monetize features/ads)…who can?” Suddenly, many home-run new ideas appeared as a huge gamble. Whereas from 2009-2011, the market was (naively?) friendly to social media investments.
As people are becoming increasingly “platform agnostic” (not loyal to any one social media site or service provider), investors are even more gun-shy about putting all their eggs in one basket. The truth is that social interactive concepts — such as watching videos, sharing photos, Do-It-Yourself project forums, etc. — will continue to be created and diversify. But the more we become addicted to these social/narcissistic interactions in our lives, the less we care who provides them. Social media brands become generic utilities pretty quickly…or are bought out by Google. This creates an incredibly narrow path for long-term, independent success with any one social media network or app.
Investing in social media has become like investing in the next catchphrase or slang. I still like “radical”, though. It’s rad.