Web 2.0: What Happened to Organic Growth???

Another day, another round of VC. From TechCrunch this week:

Online social network Multiply has closed a Series A funding round with $5 million from Transcosmos and $1 million from the company’s founders. Multiply is a service that filters all networking functions, from highlighted users to visible tag clouds, through a proximity filter with a slider. In other words, users determine whether they want to view information about people just on their contacts list, who are friends of a friend, etc.

And this from last month (via The Medici Effect):

Wine.com has become the most stubborn dot.com hangover ever.

The San Francisco online wine retailer, which depending on how you count is now on around its seventh reincarnation since launching in the 1990s, will announce tomorrow that it has raised $12 million in new venture capital from New York-based Baker Capital.

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p>Technorati also announced a new $7 million round this week. Hardly significant for a company people speculated to have been talking about a billion-dollar acquisition a while ago, but still, it makes you wonder – if the organic growth model really works, how can a Web 2.0 poster-child still need a cash injection after being live and successful for over 2 years?

Cameron Reilly I believe had planned to go organic with ThePodcastNetwork, but he reported this week that he started to opt for the acquisition path instead.

Funding last week for some hotel version of myspace I’ve never heard of that wants to expand to Japan; Rumours of upcoming funding for HuffingtonPost; I could go on.

VC is all good if you know what you’re gonna do with the cash, but what happened to organic growth? You know, all the arguments about “everything’s cheap now” (open-source argument), “people are willing to pay for virtual goods” (37S/Flickr argument), “avoid overplanning” (agile argument), “Adsense rocks” (plentyoffish argument), “VCs burned us in 2000” (learning from history argument), “we can outsource development” (naieve naieve argument).

Am I missing something? Has Web 2.0 entered a new phase where VC is now the thing to do? Did the organic growth model just fade away?

4 thoughts on Web 2.0: What Happened to Organic Growth???

  1. Michael, I have funded The Podcast Network out of my own savings account for 18 months. I haven’t had an income for 24 months. TPN is generating revenue, but isn’t profitable. So for me it’s a question of what the business needs are. Right now, I need funds to keep TPN going while we keep growing the adverting revenue.

  2. Hi Cameron,

    Thanks for the feedback.

    I think it’s interesting that there does seem to be a shift from the thinking a couple of years back, and it seems like the experience of a lot of savvy companies – like TPN – are evidence that the “organic growth” model does need to be questioned a bit more.

  3. Pingback: Dead2.0 » Antisocial Networking

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