MarketingVOX: The financial backers of online start-ups are beginning to wonder if advertising revenue will really show up once prospective businesses launch, reports The Seattle Times.
Venture capitalists are beginning to sense a limit on the number of websites whose success relies primarily upon ad revenue. Speculations mount as the traffic necessary to turn a significant ad-based profit also rises.
A number of investors at last week’s WSA Investment Forum began to buzz with doubt as a number of fledgling companies, including Mixxer, Smilebox, Treemo, Ripl and Yodio, courted aid.
Of the showcased business models Frazier Technology Ventures’ Paul Bialek simply asked, “How are you going to monetize (the business) when you give it away for free?”
The Web 2.0 era has been characterized by prominent ad-supported software and services that cost nothing to consumers.
Some investors are already opting to step away from the negotiation table, waiting to see if sites or services can build an audience before stepping in to offer angel investment help.
Related stories:
- Analysts: No Bubble Yet – Web 2.0 Isn’t Big Enough
- NY Times Launches Online ‘DealBook’ Financial Report
- Revenue Science Gets $24 Million in VC Financing
- Omniture Gets $40MM in Venture Capital
