For all the new services being launched each day by the hundreds of Web 2.0 startups out there, there has been precious little acquisition activity. If you remove the deals for undisclosed values, the number of Web 2.0 exits can be counted on one hand. After MySpace and Grouper, the list grows short.

So, I asked the Internet panelists at The Deal’s Silicon Valley Summit why they thought so few deals had been struck and when that might change. Greylock Partners’ James Slavet said there had been some activity around gaming and noted that in other areas, it will just take time. He pointed to a cycle of investment that occurred from 2003 to 2005 that will come to fruition over the next few years (or in the case of Facebook, in the next few days (editor’s note: that was my addition, not James’ comment).

Ask.com vice president for strategy and operations Paul Wehrley said part of the reason why small deals will continue to be done is the fact that even a small exit can be very profitable for the founders if they never took venture capital.

Fox’s Mike Lang noted that his company analyzes the possibility of building its own technology rather than just buy a startup. It also looks to partner when possible as it did with Snocap in the area of music. Lang added that each company has limited resource so it can only focus on the things that will have the highest impact. As an example, he pointed to News Corp.’s recent purchase of Jamba from VeriSign.

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Brian Ward

Tags: svsummit06, svsummit, m&a, web2, youtube,vc, venture+capital