SMI did a report on Social Media Funding in the US (where 80% of our traffic comes from) and we were of course particularly interested in reading about the performance of Social Networks.

After LinkedIn’s wildly successful May 19 IPO, it comes as no surprise that the social networks still represent the hottest investment within social in terms of dollars invested (No. 1) and deals (No. 2). The big news was Facebook tapping Goldman Sachs to raise $1.5 billion in January. Yes, Facebook alone accounts for 60% of the total private-sector funding included in the report, but to call this a one-and-done category would be mistaken.

A total of 10 social networks were funded in Q1 in the US, some that harness the power of niche, mobile-connected communities (Color), others that tap into the swelling interest in crowdsourced Q&A sites (StackExchange). The new crop of funded social networks rely heavily on geo-based features and crowdsourcing to build knowledgeable vertical communities. This tells us is innovation in social network design is still thriving and that no single company will dominate this sector. And, with an average deal size of just under $12 million/company (excluding Facebook’s “outlier” investment of $1.5 billion) it shows the investment activity is centred on the younger crop of social networking up-and-comers.

Social Network investment highlights:

• 10 firms funded in Q1
• Average deal size (excluding Facebook): $11.9 million