Investors Take a Stroll with Widgets

2007 was supposed to be the Year of the Widget, according to Newsweek, and Jon Swartz of USA Today apparently agrees that the promise has been fulfilled. He says:

[Widgets] are all the rage on the Web. Marketers are thinking of ways to use them to sell ads, and venture capitalists are mulling investments in the hottest widget makers. The stampede reached a roar this month, when market leader MySpace and Facebook expanded their services for targeted ads, including widgets designed by marketers.

But look at the numbers for investments in widget distribution platforms and widget suppliers, and it becomes clear that this not a stampede but more like a Sunday stroll through the widget park.

A widget is just an embeddable bit of web or desktop content wrapped up in a nice user interface. You can put widgets on blogs, social networking profile pages, or on an Ajax start page, though not all widgets can be embedded on all kinds of pages.
Though many companies might use widgets to promote and distribute their content or features, there are two categories of startups that, to me, represent relatively pure bets on widgetization. The first is widget development, distribution, and packaging platforms like Clearspring or Widgetbox; the second, widget suppliers like RockYou or Slide.
I’m leaving out many other kinds of widgets and widget startups, of course. You can have desktop dashboard widgets, widgets to be embedded on blogs like Blogburst or MyBlogLog or Lijit, Ajax start pages that support widgets, video syndication widgets, and more.
But taking a look at widget platforms and social networking widget purveyors, we can get an idea of whether 2007 has seen a stampede towards widgets or perhaps something more genteel. I’ve gathered funding data for widget distribution platforms and widget distributors in the table below.
widget investments
This doesn’t represent all the funding for such companies. Fox Media is building SpringWidgets, so that investment doesn’t appear here. Widgetbox has been rumored to have taken additional funding from Sequoia. And some companies have reported investments but declined to provide specific figures. Still, this gives an idea of the magnitude of interest in the space.
You could also argue that companies like YouTube and PhotoBucket are widget companies — and if you added in their acquisition prices the numbers do start to get really big, really quickly (partly, of course, because acquisition prices represent the entire value of those companies). But I think those two are examples of how embeddable web content can help promote a broader web service. iLike might fit better with those, too.
The total funding for these companies is just under $60 million, a respectable number but by no means a stampede towards widgets. This could reflect the uncertainty around how to make money with widgets and widget platforms. Or perhaps it’s more evidence of investor sobriety.