Video companies lead financing activity.

1. SOFTWARE & SERVICES 3 FEBRUARY 2009
DAVID SHORE, CFA, MBA 416.860.6784
WEB 2.O WEEKLY david.shore@researchcapital.com
Arun Thomas (Associate) 416.860.7666
VIDEO SITES LEAD BUSIEST FINANCING MONTH SINCE APRIL 2008
S UMM AR Y
W e have identified 80 public companies for our Web 2.0 universe with a combined market cap of almost $25 billion.
These include a wide variety of companies, including MMOG (Massive Multi-Player Online Gaming) companies, social
networking software companies, media sharing companies, and social lending companies. The average market cap for
the group is over $300 million, with average trailing revenue of $100 million. The companies are also highly profitable
with an average EBITDA margin of 17.6%. On a valuation basis, the overall average is 4.0x trailing revenue and 9.4x
trailing EBITDA. Seventeen of the companies have more than 500 employees.
CA P IT AL M AR K ET A CT I V IT Y
After 18 financings in December totalling $122.1 million (average $6.8 million), January has been the busiest month
since April 2008, with 29 financings totalling $199.5 million (average $6.9 million). The largest financing in the last
three months was of HuffingtonPost for $25.0 million in November (Figure 2). Ten companies raised more than $10
million each in January – with AdMob the largest at $12.5 million.
Financing by Sector - January 2009
60.0
50.0
40.0
(US$m)
30.0
51.7
20.0 38.5
10.0 20.0
12.0 12.0 11.5 11.4 11.0 10.0
6.5 6.2 5.0
2.5 1.2
0.0
Crowdsourced Content
Ad Network
Social Networks
Analytics
Travel
Video
Infrastructure
Gaming
Micromedia
Blog
RSS
Comment/Reputation
Wiki
Virtual World
# companies 7 4 2 1 2 2 1 2 1 1 3 1 1 1
IN DU ST R Y N E W S
This section discusses corporate activity such as partnerships, new product launches, and financial results.
V AL U AT I O N
This section provides an overview of valuation metrics for the 80 public W eb 2.0 companies we have identified thus
far. W e calculate TEV/Revenue, TEV/EBITDA, and P/E multiples for the companies in our universe. We also compare
multiples by country and exchange.
This report has been created b y Anal ysts that are emplo yed b y Research Capital Corporation, a Canadian Investment Dealer.
w w w . r e s e a rc h c a p i t a l . c o m
T o ro n t o 4 1 6 . 8 6 0 . 7 6 0 0 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550

2. Page 2
THE WEB 2.0 UNIVERSE
80 public Web 2.0 companies identified: W e have identified 80 public companies for our W eb 2.0 universe with a
combined market cap of almost $25 billion. These include a wide variety of companies, including MMOG (Massive Multi-
Player Online Gaming) companies, social networking software companies, media sharing companies, and social lending
companies. See below for a summary of the full universe (Figure 1). Note that we have not included the large technology
and media companies such as Google, Yahoo, Disney, and Sony in our universe as they would skew the results due to
their immense size relative to the rest of the group. The average market cap for the group is over $300 million, with
average trailing revenue of $100 million. The companies are also highly profitable with an average EBITDA margin of
17.6%. On a valuation basis, the overall average is 4.0x trailing revenue and 9.4x trailing EBITDA. Seventeen of the
companies have more than 500 employees.
Comparable Company Analys is > Web 2.0
S ummary
US D LTM
Trading Current US D Market Total US D LTM Total TE V/LTM TEV/LTM
Company Name LTM as of Ticker E xc hange Currency HQ P rice Cap ($m) Rev ($m) EB ITDA ($m) E BITDA % Revenue EBITDA Employees Website
Accelerize N ew Media, Inc. 9/30/2008 AC LZ OTCB B U SD United States 0.35 9.4 3. 2 (4.7) NM 4. 3x - 20 www. accelerizenewmedia.com
Actoz Soft Co., Ltd. 9/30/2008 A052790 K OSE KRW South K orea 11,550.00 73.3 52.6 9.6 18. 3% 0. 9x 5.0x NA www. actoz.com
AQ Interactive, Inc. 9/30/2008 3838 TSE J PY J apan 39,000.00 23.6 61.4 4.9 8.0% - - NA www. aqi.co.jp
Associated Media Holdings Inc. 6/30/2007 ASMH OTCP K U SD United States 0.01 0.2 0. 1 (2.3) NM 10.2x - 3 www.macgregorenergy. com
BoomJ Inc 9/30/2008 BOMJ OTCB B U SD United States 0.90 36.8 1. 1 (7.7) NM 36.9x - 25 www.boomj. com
Bright Things plc 9/30/2008 AIM:B GT AIM GBP United K ingdom 0.02 3.1 0. 2 (1.6) NM 13.0x - 9 www. brightthings.com
BroadW ebAsia Inc. 9/30/2008 B W BA OTCP K U SD United States 1.01 85.7 0. 0 (4.6) NM - - 46 www. broadwebasia.com
CDC Corp. 9/30/2008 CHIN.A NasdaqGS U SD H ong Kong 0.75 80.9 428.1 18.8 4.4% 0. 3x 7.3x 3,125 www.cdccorpora tion.net
China G ateway Corporation 9/30/2008 CG WY OTCB B U SD United States 0.00 0.0 6. 7 (6.6) -98.9% 0. 0x - 37 -
Chinese G amer International 9/30/2008 G TSM:3083 G TSM T WD Ta iwan 90.30 227.5 38.1 18.0 47. 1% 4. 5x 9.5x NA www.chinesegamer. net
CornerW orld Corporation 10/31/2008 CW R L OTCB B U SD United States 0.41 19.3 0. 6 3.1 506.8% 33.7x 6.7x NA www. cornerworld.com
DADA SpA 9/30/2008 CM:DA CM E UR Ita ly 5.63 116.9 217.1 34.7 16. 0% 0. 7x 4.6x 574 da da.dada. net
Digita lFX International, Inc. 9/30/2008 DXN AME X U SD United States 0.12 3.0 16.9 (4.5) -26.4% 0. 3x - 68 www. digitalfx.com
Digita lP ost Interactive, Inc. 9/30/2008 DG LP OTCB B U SD United States 0.02 1.2 0. 4 (3.3) NM 5. 3x - 11 www. digitalpostinteractive.com
Digita lTown, Inc. 11/30/2008 DG TW OTCB B U SD United States 1.50 40.7 NM (2.5) NM - - 3 www.enetpc.com
Dolphin Digital Media , Inc. NA DP DM OTCB B U SD United States 0.70 34.1 NA NM NM - - 6 www.dolphindigitalmedia. com
Eolith Co. Ltd. 12/31/2007 A041060 K OSE KRW South K orea 530.00 17.8 18.0 (0.0) -0. 3% 1. 0x - NA www.eolith. co. kr
Extensions, Inc. 9/30/2008 EXTI OTCP K U SD United States 0.20 18.9 NM NM NM - - 2 www.ext.com
F inancia l Media Group, Inc. 11/30/2008 F NGP OTCB B U SD United States 0.02 1.3 6. 8 1.2 18. 3% 0. 1x 0.4x 22 www.wa llst.net
F luid Music Canada , Inc. 9/30/2008 TS X:F MN TSX C AD United States 0.40 16.9 4. 2 (8.6) NM - - 29 www.fluidmedia networks. com
F rogster Interactive P ictures AG 6/30/2008 FR G XT R A E UR G ermany 4.63 13.9 5. 2 (3.1) -60.6% 2. 6x - NA www.frogster-ip.de/en/index.php
Ga mania Digital E ntertainment Co., L td. 9/30/2008 6180 G TSM T WD Ta iwan 20.80 93.6 110.2 18.6 16. 9% 0. 6x 3.7x NA www.ga mania.co.kr
Ga meOn Co L td. 9/30/2008 3812 TSE J PY J apan 119,500.00 132.5 83.0 21.0 25. 4% 0. 8x 3.2x NA www.gameon.co.jp
GeoS entric Oyj 9/30/2008 G E O1V HL SE E UR F inland 0.03 34.4 5. 3 ( 12.1) NM 5. 6x - 92 www.benefon.com
Giant Interactive G roup, Inc. 9/30/2008 GA NYS E U SD China 5.80 1,378.7 244.7 155. 3 63. 5% - - 1,016 www.ga-me. com
GigaMedia L td. 9/30/2008 GIGM NasdaqGS U SD Ta iwan 6.52 352.3 200.5 48.0 23. 9% 1. 4x 6.0x 975 www.gigamedia.com.tw
GoFish Corporation 9/30/2008 G OF H OTCB B U SD United States 0.20 5.1 6. 3 ( 11.0) NM 2. 5x - 41 www.gofish.com
Gravity Co., Ltd 9/30/2008 GRVY Nasda qG M U SD South K orea 0.72 20.0 35.2 6.8 19. 2% - - 636 www.gravity. co.kr
Gree, Inc. NA TSE :3632 TSE J PY J apan 5,930.00 0.0 NA NM NM - - NA www.gree. co.jp
GungHo Online Entertainment, Inc. 9/30/2008 3765 OS E J PY J apan 106,600.00 135.7 113.7 16.7 14. 7% 1. 0x 6.5x NA www. gungho.co. jp/english/
HanbitS oft, Inc. 9/30/2008 A047080 K OSE KRW South K orea 3,040.00 47.9 49.9 ( 12.8) -25.6% 0. 6x - NA www.hanbitsoft.co. kr
IAS E nergy, Inc. 10/31/2008 IAS C.A OTCB B U SD Canada 0.03 1.8 0. 0 (0.9) NM - - NA www. ia senergy.com
IdeaE dge, Inc. 9/30/2008 OTCB B :IDAE OTCB B U SD United States 0.42 17.7 0. 0 (3.5) NM - - NA www.ideaedge.com
J umbuck Entertainment P ty Ltd. 6/30/2008 AS X:J MB AS X AUD Australia 0.48 15.0 9. 9 4.6 46. 0% 1. 1x 2.4x 72 www.jumbuck. com
J umpTV Inc. 6/30/2008 TSX :J TV TSX C AD Canada 0.44 40.3 11.5 (1.8) -15.3% 4. 3x - NA www.jumptv.com
Ka boose Inc. 9/30/2008 TSX :K AB TSX C AD Canada 0.43 48.6 59.8 4.6 7.6% 0. 9x 12.2x NA www.kaboose.com
Kingsoft Co. Ltd. 9/30/2008 3888 SE HK H KD China 2.66 368.2 106.5 36.0 33. 8% 2. 6x 7.8x 1,660 www. kingsoft.com
Lingo Media Corpora tion 9/30/2008 TSX V: LM TS XV C AD Canada 1.05 10.9 3. 3 (1.4) -42.5% 3. 5x - NA www.lingomedia .com
LiveWorld Inc. 9/30/2008 LV W D OTCP K U SD United States 0.06 1.9 11.7 (1.2) -10.1% - - 73 www.liveworld. com
LookS mart, Ltd. 9/30/2008 LOOK Nasda qG M U SD United States 1.35 23.0 69.5 (2.6) -3. 7% - - 93 www. looksmart.com
Magnitude Information S ystems Inc. 9/30/2008 MAGY OTCB B U SD United States 0.03 11.3 0. 1 (3.2) NM - - 13 www.ma gnitude. com
Mixi, Inc. 9/30/2008 2121 TSE J PY J apan 534,000.00 909.7 125.3 49.4 39. 4% 6. 4x 16.1x NA www.mixi.co.jp
Moggle, Inc 12/31/2008 MMOG OTCB B U SD United States 2.00 70.6 NM (1.1) NM - - 3 www. playmoggle.com
National L ampoon Inc. 7/31/2008 NLN AME X U SD United States 0.73 6.9 7. 4 (1.6) -21.1% 1. 6x - 24 www.nationallampoon.com
NEOW IZ G ames Corpora tion 12/31/2007 A095660 K OSE KRW South K orea 23,600.00 163.0 129.7 34.9 26. 9% 1. 2x 4.4x NA www.neowiz.com/kor/
NetDra gon WebS oft, Inc. 9/30/2008 777 SE HK H KD China 2.75 187.4 95.1 46.2 48. 6% 0. 1x 0.2x 1,482 www. nd. com.cn
Netea se.com Inc. 9/30/2008 NTE S NasdaqGS U SD China 18.73 2,304.8 421.7 273. 8 64. 9% - - 2,413 corp.163.com
NeXplore Corporation 9/30/2007 NXP C OTCP K U SD United States 0.55 30.7 NM (4.9) NM - - 19 www.nexplore.com
Ngi G roup Inc. 9/30/2008 2497 TSE J PY J apan 34,300.00 47.2 101.8 34.1 33. 5% - - NA www.neta ge.co.jp/en/index. html
Northgate Technologies L imited 9/30/2008 590057 B SE INR India 38.90 27.9 137.0 24.4 17. 8% 0. 2x 1.1x 286 www.northgatetech.com
Open Text Corp. 12/31/2008 OTEX NasdaqGS U SD Canada 34.74 1,802.6 769.3 195. 4 25. 4% 2. 5x 9.9x 2,915 www.opentext.com
Openwa ve S ystems Inc. 12/31/2008 OPW V NasdaqGS U SD United States 0.81 66.9 199.6 ( 10.4) -5. 2% - - 657 www.openwa ve.com
Perfect W orld Co., Ltd. 9/30/2008 P WR D NasdaqGS U SD China 13.91 793.5 186.5 99.7 53. 5% - - 1,401 www.wanmei.com/en/index.htm
PhotoChannel Networks Inc. 9/30/2008 TS XV : PN TS XV C AD Canada 1.72 46.4 13.7 (2.4) -17.7% 3. 3x - NA www.photocha nnel.com
Quepasa Corp. 9/30/2008 QP SA NasdaqCM U SD United States 1.87 23.7 0. 1 ( 11.8) NM - - 63 www.quepasa . com
Shanda Interactive Entertainment L td. 9/30/2008 SNDA NasdaqGS U SD China 29.22 2,027.4 477.0 227. 8 47. 8% - - 2,564 www.snda .com
Shutterfly, Inc. 9/30/2008 S FLY NasdaqGS U SD United States 6.82 171.0 203.3 25.7 12. 6% 0. 6x 5.1x 512 www.shutterfly.com
SK Communications Co. , Ltd. 12/31/2007 A066270 K OSE KRW South K orea 7,780.00 230.2 149.2 14.0 9.4% 1. 5x 16.4x NA -
SNAP Interactive, Inc. 9/30/2008 S TV I OTCB B U SD United States 1.00 10.7 2. 3 0.2 10. 1% 4. 2x 41.2x 5 www.snap-interactive.com
SNM G lobal Holdings 9/30/2008 S NMN OTCP K U SD United States 0.00 0.0 2. 0 (0.7) -34.8% 1. 1x - 33 www. snmglobalholdings.com
Spark Networks, Inc. 9/30/2008 LOV AME X U SD United States 2.41 51.7 60.1 11.7 19. 5% 0. 8x 4.1x 176 www.spark.net
SpectrumDNA, Inc. 9/30/2008 S P XA OTCB B U SD United States 0.10 4.9 0. 1 (2.7) NM - - 7 -
Tencent Holdings Ltd. 9/30/2008 700 SE HK H KD China 47.05 10, 894.1 901.8 446. 8 49. 5% 13.0x 26.3x 6,039 www. tencent.com. hk /index_e.shtml
The P arent Company 8/2/2008 KIDS .Q OTCP K U SD United States 0.03 0.7 112.0 ( 13.5) -12.0% 0. 2x - 347 www. theparentcompany.com
The9 Limited 9/30/2008 NCTY NasdaqGS U SD China 14.90 411.4 252.0 94.9 37. 7% - - 1,361 www.the9.com
TheStreet.com, Inc. 9/30/2008 T SCM Nasda qG M U SD United States 2.87 87.5 75.2 12.2 16. 2% 0. 1x 0.8x 349 www.thestreet. com
Tree. Com, Inc. 9/30/2008 TR E E Nasda qG M U SD United States 4.00 37.5 231.2 ( 39.6) -17.1% 0. 1x - 1,000 www.lendingtree. com
Uniserve Communications Corp. 11/30/2008 TS XV :US S TS XV C AD Canada 0.10 2.0 24.1 0.1 0.4% 0. 2x 40.7x NA www.uniserve. com
United Online Inc. 9/30/2008 UNTD NasdaqGS U SD United States 6.00 491.8 538.7 130. 6 24. 2% 1. 6x 6.5x 928 www.unitedonline.net
UOMO Media, Inc 10/31/2008 UOMO OTCB B U SD Canada 0.08 6.8 0. 5 (0.4) -91.6% 15.1x - NA www.uomolife.com
VOIS , Inc. 9/30/2008 VOIS OTCB B U SD United States 0.75 5.4 0. 0 (4.0) NM - - 4 www.vois. com
W ebzen Inc. 9/30/2008 WZE N Nasda qG M U SD South K orea 1.45 17.2 20.3 (6.0) -29.5% - - 338 www.webzen.co. kr
W izza rd S oftwa re Corporation 9/30/2008 W ZE AME X U SD United States 0.70 31.6 6. 2 (6.5) NM 5. 1x - 110 www.wizzardsoftware.com
W oozyF ly, Inc. 9/30/2008 W ZYF OTCB B U SD United States 0.15 2.6 0. 0 NM NM - - 14 www.woozyfly. com
W orlds.com Inc. 9/30/2008 W DDD OTCB B U SD United States 0.22 11.5 0. 1 NM NM - - 1 www.worlds. com
W yndstorm Corporation NA W YND OTCB B U SD United States 0.13 2.3 NA NM NM - - NA www.wyndstorm.com
XING AG 9/30/2008 O1B C XT R A E UR G ermany 28.21 188.0 40.1 15.6 38. 8% 3. 3x 8.6x 161 www.xing. com
YedangOnline Corp. 12/31/2007 A052770 K OSE KRW South K orea 6,830.00 76.9 49.3 11.0 22. 4% 1. 5x 6.9x NA www. yeda ngonline. com/indexhome. asp
Ynk K orea Inc. 12/31/2007 A023770 K OSE KRW South K orea 3,805.00 6.7 14.0 (1.1) -7. 6% 0. 5x - NA www.ynk.net
ZipLocal Inc. 9/30/2008 TSX V:ZIP TS XV C AD Canada 0.02 1.3 2. 8 (3.9) NM 0. 7x - NA www. ziplocal.com
High 10, 894.1 901.8 446.8 506.8% 36.9x 41.2x 6,039
Low 0.0 0.0 -39.6 -98.9% 0. 0x 0.2x 1
Average 310.2 100.4 26.2 17.6% 4.0x 9.4x 601
Figure 1. Web 2.0 Universe Summary
Source. Capital IQ

3. Page 3
C A P I T A L M A R K E T S A C T I V I T Y (M & A A N D F I N A N C I N G )
Video sites lead busiest month since April 2008: After 18 financings in December totalling $122.1 million (average $6.8
million), January has been the busiest month since April 2008, with 29 financings totalling $199.5 million (average $6.9
million). The largest financing in the last three months was of HuffingtonPost for $25.0 million in November (Figure 2). Ten
companies raised more than $10 million each in January – with AdMob the largest at $12.5 million. For additional details,
see Figure 27 (at end of note).
Financing - Last Three Months
30.0
25.0
20.0
Jan-09
(US$m)
15.0 Dec-08
Nov-08
10.0
5.0
0.0
Motionbox
Xobni
Overlay.TV
Rockyou
PlaySpan
AdMob
NewsGator
Go Internet Media
FooMojo
One True Media
Social Median
Kewego
SocialMedia
Playdo
Casual Collective
CoveritLive
VirtuOz
IMVU
SundaySky
Play Hard Sports
InsideView
Gbox
Multiply
Tripwolf
StockTwits
Meez
GoFish
NetShelter
Nurien
Yodle
Taptu
Scribd
JibJab
Superfish
Snapmylife
Tagged
Jackbe
Tumblr
DotBlu
Hubdub
Snooth
Identi.ca
HuffingtonPost
Angie's List
KickApps
Aster Data Systems
RatePoint
AboutUs
ChakPak
Sportsblogs
E-Global Sports
Clickpass
Blue Kai
Geni
DECA
Machinima.com
Pulse Entertainment
Worlds.com Inc.
Figure 2. Financings, Last Three Months
Source. Company reports
Video sites lead: The activity was led by seven transactions for video-related companies, raising over $50 million in the
month (Figure 3). Four ad networks raised almost $40 million between them.
Financing by Sector - January 2009
60.0
50.0
40.0
(US$m)
30.0
51.7
20.0 38.5
20.0
10.0
12.0 12.0 11.5 11.4 11.0 10.0
6.5 6.2 5.0
2.5 1.2
0.0
Travel
Video
Infrastructure
Micromedia
Blog
Ad Network
Social Networks
Analytics
Crowdsourced Content
RSS
Gaming
Virtual World
Comment/Reputation
Wiki
# companies 7 4 2 1 2 2 1 2 1 1 3 1 1 1

4. Page 4
Figure 3. Financings, by Sector, January 2009
Source. Company reports
But January activity doesn’t offset weak 2H/08: However, on a trailing 12-month basis, financings are down for the third
month in the last four, with average round sizes decreasing slightly as of January (Figure 4).
LTM Financing
4,000.0 20.0
18.0
3,500.0
16.0
3,000.0
14.0
2,500.0
12.0
(US$m)
(US$m)
2,000.0 10.0
8.0
1,500.0
6.0
1,000.0
4.0
500.0
2.0
0.0 0.0
May-06
May-07
May-08
Nov-05
Mar-06
Nov-06
Mar-07
Nov-07
Mar-08
Nov-08
Jul-05
Sep-05
Jan-06
Jul-06
Sep-06
Jan-07
Jul-07
Sep-07
Jan-08
Jul-08
Sep-08
Jan-09
Total Average
Figure 4. Financings, Last 12 Months
Source. Company reports
Cumulative total passes $5.2 billion: Overall, on a cumulative basis, W eb 2.0 financings have totalled over $5.2 billion,
with the majority of the financing coming in late 2007 and the first three quarters of 2008 (Figure 5).
Web 2.0 Financing (cumulative)
1,400.0 6,000.0
1,303.0
1,200.0
5,000.0
1,000.0 944.7
4,000.0
800.0
(US$m)
(US$m)
701.7
3,000.0
600.0
524.9
2,000.0
400.0 338.5
297.0
199.5 1,000.0
200.0 145.7
124.1 116.3 97.0
87.2 73.4
37.5 33.5 18.2 41.9 49.1 29.4
35.5 28.8 20.1
0.0 0.0
Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1
2003 2004 2005 2006 2007 2008 2009
Figure 5. Financing, Cumulative
Source. Company reports

5. Page 5
U.S. remains dominant: U.S. companies continue to dominate capital market activity – with almost 73% of
financings/M&A involving U.S. companies (based on dollars) (Figure 6). Canadian companies generated under 1% of
capital market activity based on dollar volume (Figure 6). Based on number of transactions, the U.S. leads with 73% of
deals, while Canada is third in number of financings at 5.5% (Figure 7).
Financing/M&A by Country - LTM (#)Canada
Financing/M&A by Country - LTM ($) 5.5%
UK
UK
5.9%
13.2%
Israel
3.1%
France
China 2.3%
7.9%
Russia ROW
1.7% Israel 10.2%
0.8%
Canada
0.7%
Denmark
0.7%
ROW
2.4%
USA
USA
73.0%
72.6%
Figures 6 & 7. Financing/M&A, by Country (LTM, $, #)
Source. Company reports
More early-stage funding (by count): Almost half of financings in the last 12 months are for early-stage companies
(Angel/Seed or Series A) (Figure 8). Series B rounds are 30.1% of the total, with later-stage (Series D, E and PIPE) deals
accounting for just 7.1%.
Financing by Type - LTM
Series B
Series C
30.1%
13.0%
Series D
4.6%
Angel/Seed
9.2%
Debt financing
2.9%
PIPE
Series A 2.1%
38.1%
Figure 8. Financing, by Type (LTM, $)
Source. Company reports
“D” series are largest equity rounds (by dollar): In the last 12 months, there have been 11 “D” series rounds, averaging
over $25 million per financing (Figure 9). Note that we have excluded the $430 million Series C financing of Oak Pacific
Interactive as it skews the results substantially.

6. Page 6
Average financing round size - LTM
40.0
35.0
30.0
25.0
(US$m)
20.0
38.1
15.0
26.2
10.0
18.2
11.3
5.0 10.0
8.8
6.4
3.3
0.0
Angel/Seed Debt financing PIPE Series A Series B Series C Series D Series E
# rounds
22 7 5 91 72 31 11 1
Figure 9. Average Size per Round
Source. Company reports
C A P I T A L M A R K E T S A C T I V I T Y (P R I C E P E R F O R M A N C E )
Price Performance: Our W eb 2.0 index (market-cap weighted) has closely tracked the performance of the NASDAQ
composite index, although it has outperformed the index since late October 2008 (Figure 10).
Web 2.0 Index Price Performance
140
120
100
80
60
40
20
0
2/4/2008
2/18/2008
3/3/2008
3/17/2008
3/31/2008
4/14/2008
4/28/2008
5/12/2008
5/26/2008
6/9/2008
6/23/2008
7/7/2008
7/21/2008
8/4/2008
8/18/2008
9/1/2008
9/15/2008
9/29/2008
10/13/2008
10/27/2008
11/10/2008
11/24/2008
12/8/2008
12/22/2008
1/5/2009
1/19/2009
2/2/2009
NASDAQ COMP Web 2.0 (Market Cap Weighted)
Figure 10. Web 2.0 Price Performance
Source. Capital IQ

7. Page 7
Moggle leads; DigitalTown continues weak performance: DigitalTown (DGTW -OTCBB) again had the worst
performance in the group (for stocks with prices greater than $1) (Figure 11), falling 34.8% on the week. Moggle (MMOG-
OTCBB) increased the most, +33.3%.
1 Week Pric e P erformanc e
Moggle, Inc 33. 3%
AQ Interactive, Inc. 30. 9%
13. 3%
S hutterfly, Inc.
S K C ommunications C o. , L td. 10. 4%
10. 1%
Mixi, Inc.
Actoz S oft C o. , L td. 9. 0%
G ree, Inc. 8. 4%
8. 2%
G ungHo Online E ntertainment, Inc.
O pen T ext C orp. 7. 2%
7. 1%
L ingo Media C orpora tion
T encent Holdings L td. 6. 3%
Neteas e. com Inc. 5. 7%
4. 9%
S ha nda Interactive E ntertainment L td.
NetDragon W ebS oft, Inc. 3. 8%
E olith C o. L td. 2. 9%
NE O W IZ G ames C orpora tion 2. 6%
L ookS ma rt, L td. 2. 3%
1. 4%
W ebzen Inc.
K ings oft C o. L td. 0. 0%
C hines e G a mer International 0. 0%
S park Networks , Inc. -0. 8%
T heS treet. com, Inc. -1. 0%
-1. 1%
Q uepas a C orp.
HanbitS oft, Inc. -1. 1%
P hotoC hannel Networks Inc. -1. 1%
-1. 2%
G iga Media L td.
U nited O nline Inc. -1. 5%
-2. 7%
G iant Interactive G roup, Inc.
XING AG -2. 7%
G ameO n C o L td. -2. 8%
-3. 5%
G amania Digital E ntertainment C o. , L td.
Y edangO nline C orp. -3. 7%
Y nk K orea Inc. -3. 7%
T he9 L imited -5. 8%
F rogs ter Intera ctive P ictures AG -6. 5%
-7. 2%
T ree. C om, Inc.
Northgate T echnologies L imited -8. 5%
P erfect W orld C o. , L td. -10. 0%
DADA S pA -12. 4%
Ngi G roup Inc. -23. 1%
-34. 8%
DigitalT own, Inc.
-40. 0% -30. 0% -20. 0% -10. 0% 0. 0% 10. 0% 20. 0% 30. 0% 40. 0%
Figure 11. 1-Week Price Performance
Source. Capital IQ
INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS)
DigitalTown, Inc. Names Jan K. Andersen as CEO: The board of directors of DigitalTown, Inc. named Jan K. Andersen
to the new position of Chief Executive Officer. Richard A. Pomije will continue as Chairman of the Corporation. Andersen
most recently served as President and CEO of Bellacor.com, which he led from its inception in 2000 to become a leading
e-tailer in the home furnishings category. W hile at Bellacor.com, he grew revenues by more than 50% annually and
brought the company to profitability within a year of its initial launch. He was also an early pioneer of several e-tail
strategies now commonplace.
Openwave Systems Inc. Enters into $40 Million Secured Revolving Credit Arrangement with Silicon Valley Bank:
Openwave Systems Inc. and Silicon Valley Bank entered into a $40 million secured revolving credit arrangement to
improve liquidity and working capital for the Company. The Company may borrow, repay and reborrow under the line of
credit facility at any time. As of January 27, 2009, the line of credit facility bears interest at 4% per annum. The
Company's line of credit is collateralized by substantially all of the Company's assets and requires the Company to comply
with customary affirmative and negative covenants principally relating to use and disposition of assets, the satisfaction of
a liquidity coverage ratio test and minimum EBITDA requirements. In addition, the credit arrangement contains customary
events of default. Upon the occurrence of an uncured event of default, among other things, the Bank may declare that all
amounts owing under the credit arrangement are due and payable. The line of credit and facility expire on January 22,
2011.
Tree.Com Amends Line of Credit Agreement with Countryw ide Bank, FSB; Names Patrick L. McCrory as Director:
On January 23, 2009, the Tree.Com, Inc., through its subsidiary Home Loan Center, Inc., mutually agreed with
Countrywide Bank, FSB to extend the term of its $50 million committed line of credit to February 23, 2009 and to revise

8. Page 8
the interest rate to 30-day LIBOR plus 225 basis points. In addition to certain amendments to the financial covenants, the
parties also mutually agreed to reduce the uncommitted line of credit from $150 million to $50 million. Both parties
continue to work on a one-year extension of the committed facility. On January 26, 2009, the Company's Board of
Directors appointed Patrick L. McCrory as a director of the Company. The Board of Directors determined that Mr. McCrory
qualifies as an 'independent' director, and appointed him to serve on the Company's Compensation and Nominating
Committees.
VALUATION
MMOG companies lead market cap charts: Just five (same as last week) companies in our W eb 2.0 universe top US$1
billion in market capitalization (Figure 12). In addition, 60 of the 80 (same as last week) companies have market caps
under US$100 million, with 22 (24 last week) under $10 million. Online gaming companies dominate the top of the list with
five of the top seven by market cap.
Market C ap (US D m)
T encent H oldings L td.
Netea s e.com Inc. 2304. 8
2027. 4
S handa Interactive E nterta inment
O pen T ext C orp. 1802. 6
G ia nt Intera ctive G roup, Inc. 1378. 7
Mixi, Inc. 909. 7
P erfect W orld C o. , L td. 793. 5
United O nline Inc. 491. 8
T he9 L imited 411.4
K ings oft C o. L td. 368. 2
G iga Media L td. 352. 3
230. 2
S K C ommunica tions C o. , L td.
C hines e G amer Interna tiona l 227. 5
XING AG 188. 0
NetDra gon W ebS oft, Inc. 187.4
S hutterfly, Inc. 171.0
NE O W IZ G ames C orpora tion 163. 0
G ungHo O nline E nterta inment, Inc. 135. 7
G a meO n C o L td. 132. 5
DADA S pA 116. 9
G a ma nia Digita l E ntertainment C o. , 93. 6
T heS treet. com, Inc. 87. 5
B roadW ebAs ia Inc. 85. 7
C DC C orp. 80. 9
76. 9
Y edangOnline C orp.
Actoz S oft C o. , L td. 73. 3
Moggle, Inc 70. 6
O penwave S ys tems Inc. 66. 9
S park Networks , Inc. 51. 7
K aboos e Inc. 48. 6
Ha nbitS oft, Inc. 47. 9
Ngi G roup Inc. 47. 2
P hotoC ha nnel Networks Inc. 46. 4
40. 7
DigitalT own, Inc.
J umpT V Inc. 40. 3
T ree.C om, Inc. 37.5
B oomJ Inc 36. 8
G eoS entric Oyj 34. 4
Dolphin Digita l Media , Inc. 34. 1
W izza rd S oftwa re C orpora tion 31. 6
NeXplore C orpora tion 30. 7
Northga te T echnologies L imited 27. 9
Q uepa s a C orp. 23. 7
AQ Interactive, Inc. 23. 6
L ookS mart, L td. 23. 0
G ra vity C o., L td 20. 0
C ornerW orld C orpora tion 19. 3
E xtens ions , Inc. 18. 9
E olith C o. L td. 17. 8
IdeaE dge, Inc. 17. 7
W ebzen Inc. 17. 2
16. 9
F luid Mus ic C a na da , Inc.
J umbuck E ntertainment P ty L td. 15. 0
F rogs ter Intera ctive P ictures AG 13. 9
W orlds .com Inc. 11. 5
Ma gnitude Informa tion S ys tems Inc. 11. 3
Lingo Media C orpora tion 10.9
S NAP Interactive, Inc. 10.7
Accelerize New Media , Inc. 9. 4
Na tiona l La mpoon Inc. 6.9
6.8
UO MO Media , Inc
Y nk K orea Inc. 6.7
V OIS , Inc. 5. 4
G oF is h C orpora tion 5. 1
4. 9
S pectrumDNA, Inc.
B right T hings plc 3. 1
Digita lF X Internationa l, Inc. 3. 0
W oozyF ly, Inc. 2. 6
W ynds torm C orpora tion 2. 3
U nis erve C ommunications C orp. 2.0
LiveW orld Inc. 1.9
IAS E nergy, Inc. 1.8
F inancia l Media G roup, Inc. 1.3
1. 3
ZipLoca l Inc.
DigitalP os t Interactive, Inc. 1. 2
T he P arent C ompany 0. 7
As s ocia ted Media Holdings Inc. 0. 2
C hina G a tewa y C orpora tion 0. 0
S NM G loba l Holdings 0. 0
G ree, Inc. 0. 0
0 500 1, 000 1, 500 2, 000 2, 500 3, 000 3, 500 4, 000
Figure 12. Market Cap Ranking
Source. Capital IQ
TEV/Revenue (LTM) averages 4.0x: The overall average TEV/Revenue (LTM) multiple for our group is 4.0x (Figure 13).
However, this is skewed by CornerW orld (CW RL-OTCBB) at 33.7x and BoomJ at 36.9x (BOMJ-OTCBB). Excluding those
companies, the average is 2.7x. Note that we exclude multiples greater than 50x. Twenty-six of the companies have
multiples under 1.5x.