Widget maker Gigya crowed about its latest funding round this week: an $11 million Series C round led by DAG Ventures. Odds are that only the signature on the dotted line remained before the market blew up, and one has to wonder if this is the last big VC deal we'll see for a "Web 2.0" company.
The current economic climate may force an answer to whether the current tech climate really is Bubble 2.0. While many have claimed that there can't be a bubble without inflated stock prices for useless start-ups, the amount of venture capital that's been thrown at companies with the business plan to "build a userbase now; figure out funding later" has been staggering. In a floundering economy, companies need to make money to survive.
Like most widget makers, Gigya's revenue seems heavily balanced on the ad revenue sharing model. Offering its widget creation tools free to developers, Gigya follows the prevailing school of thought that advertising can always fund free. We're already seeing some of the fallout, with Gawker laying off staff and b5media cutting blogger pay scales back, both blaming ad rates that pay for those same bloggers. No matter how you spin it, the reliance on advertising is going to cut into the revenue stream of too many companies offering their wares for free while the advertisers pay for it.
If Valleywag is right, and even sites like Facebook, one of the largest widget platforms in existence, are slowly killing the widget, Gigya's funding may be the last hurrah of Web 2.0 funding.
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