Is the Venture Capital Love Affair With Social Media Over?

By Kimberlee Morrison 

According to Bloomberg Businessweek, the social media bubble is going bust. Two years ago, social media companies were attracting up to 15 percent of VC funding. However, a recent report by CB Insights show social media backing by venture capitalists down to two percent in Q1 of 2013.

So where is all this funding going? The report shows investments in business intelligence on the rise, which makes sense considering that businesses have been trying to measure the ROI of social media for nearly a decade.

After years of investing in the novelty of social media, VCs have likely grown tired of hoping their investments will pay off. Case in point: Twitter has been running on VC funding practically since inception but has yet to develop a sustainable revenue generating business model.

Businessweek contributor Ashley Vance predicted the end of the social media-investor romance back in 2011. “Once again, 11 years after the dot-com-era peak of the Nasdaq, Silicon Valley is reaching the saturation point with business plans that hinge on crossed fingers as much as anything else,” she wrote.

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