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SOFTWARE & SERVICES 24 FEBRUARY 2009
WEB 2.O WEEKLY
DAVID SHORE, CFA, MBA 416.860.6784
david.shore@researchcapital.com
Arun Thomas (Associate) 416.860.7666 
DEAL SIZES INCREASE
TWITTER RETAINS TOP SPOT FOR RAISING MONEY IN THE LAST THREE MONTHS
The largest Web 2.0 financing of the last three months remains the $35 million raised by Twitter (Figure 2). Overall,there have been 20 financings announced in February, totalling $160 million, or $8 million on average. The averagevalue for February is above the $6.8 million average for January, with four financings over $15 million in February(Twitter, Synthasite, Tremor Media and Offerpal Media) vs. no deals over $15 million in January.
Financing - Last Three Months
0.05.010.015.020.025.030.035.040.0
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Feb-09Jan-09Dec-08
 
This report has been created by Analysts that are employed by Research Capital Corporation, a Canadian Investment Dealer.For further disclosures, please see last page of this report.
www.researchcapital.comToronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550
 
 
 Page 2
THE WEB 2.0 UNIVERSE
85 public Web 2.0 companies identified:
We have identified 85 public companies for our Web 2.0 universe, with acombined market cap of $30 billion. These include a wide variety of companies, including MMOG (Massive Multi-PlayerOnline Gaming) companies, social networking software companies, media sharing companies, and social lendingcompanies. See below for a summary of the full universe (Figure 1). The average market cap for the group is ~$330million (but a median of only $28.6 million), with average trailing revenue of $134 million (median $36 million). Thecompanies are also highly profitable, with an average EBITDA margin of 17.8%. On a valuation basis, the overall averageis 3.6x trailing revenue (median 1.1x) and 8.2x trailing EBITDA (median 5.4x). Fifteen of the companies have more than500 employees.
Comparable Company Analysis > Web 2.0
Company NameLTM as ofTickerExchangeTradingCurrencyHQCurrentPriceUSD MarketCap ($m)USD LTM TotalRev ($m)USD LTM TotalEBITDA ($m)EBITDA%TEV/LTMRevenueTEV/LTMEBITDAEmployees
Accelerize New Media, Inc.9/30/2008ACLZOTCBBUSDUnited States0.318.3 3.2 (4.7)NM4.0x- 20Actoz Soft Co., Ltd.9/30/2008A052790KOSEKRWSouth Korea11,05065.2 48.9 8.9 18.3%0.9x4.7x NAAQ Interactive, Inc.12/31/20083838TSEJPYJapan31,80018.3 63.7 5.1 8.0%-- NAAssociated Media Holdings Inc.6/30/2007ASMHOTCPKUSDUnited States0.010.2 0.1 (2.3)NM10.2x- 3Bigstring Corp.9/30/2008BSGCOTCBBUSDUnited States0.010.7 0.1 (2.1)NM28.9x- 8BrightThings plc9/30/2008AIM:BGTAIMGBPUnited Kingdom0.023.3 0.2 (1.6)NM13.4x- 9BroadWebAsia Inc.9/30/2008BWBAOTCPKUSDUnited States1.0185.7 0.0 (4.6)NM-- 46CDC Corp.9/30/2008CHIN.ANasdaqGSUSDHong Kong0.7985.2 428.1 18.8 4.4%0.3x7.5x 3,125China Gateway Corporation9/30/2008CGWYOTCBBUSDUnited States0.000.0 6.7 (6.6)-98.9%0.0x- 37Chinese Gamer International9/30/2008GTSM:3083GTSMTWDTaiwan111.00271.8 37.1 17.5 47.1%5.9x12.4x NACornerWorld Corporation10/31/2008CWRLOTCBBUSDUnited States0.157.0 0.6 3.1 506.8%13.8x2.7x NADADA SpA9/30/2008CM:DACMEURItaly5.70117.7 216.0 34.5 16.0%0.7x4.6x 574DXN Holdings Bhd11/30/2008DXNKLSEMYRMalaysia0.3220.0 76.0 10.1 13.3%0.5x3.9x NADigitalPost Interactive, Inc.9/30/2008DGLPOTCBBUSDUnited States0.010.5 0.4 (3.3)NM3.6x- 11DigitalTown, Inc.11/30/2008DGTWOTCBBUSDUnited States2.4065.2 NM (2.5)NM-- 3Dolphin Digital Media, Inc.NADPDMOTCBBUSDUnited States0.5024.2 NA NM NM-- 6Eolith Co. Ltd.12/31/2007A041060KOSEKRWSouth Korea58518.3 16.7 (0.0)-0.3%1.1x- NAExtensions, Inc.9/30/2008EXTIOTCPKUSDUnited States0.1514.2 NM NM NM-- 2Financial Media Group, Inc.11/30/2008FNGPOTCBBUSDUnited States0.032.1 6.8 1.2 18.3%0.2x1.0x 22Fluid Music Canada, Inc.9/30/2008TSX:FMNTSXCADUnited States0.5021.0 4.2 (8.6)NM1.9x- 29Frogster Interactive Pictures AG6/30/2008FRGXTRAEURGermany4.0312.1 5.1 (3.1)-60.6%2.3x- NAGamania Digital Entertainment Co., Ltd.9/30/20086180GTSMTWDTaiwan21.5594.3 107.2 18.1 16.9%0.6x3.8x NAGameOn Co Ltd.12/31/20083812TSEJPYJapan91,00092.9 78.8 20.8 26.4%0.4x1.6x NAGeoSentric Oyj9/30/2008GEO1VHLSEEURFinland0.0445.6 5.2 (12.0)NM7.7x- 92Giant Interactive Group, Inc.9/30/2008GANYSEUSDChina6.051,438.1 245.2 155.7 63.5%-- 1,016GigaMedia Ltd.9/30/2008GIGMNasdaqGSUSDTaiwan6.03325.8 200.5 48.0 23.9%1.3x5.4x 975GoFish Corporation9/30/2008GOFHOTCBBUSDUnited States0.113.2 6.3 (11.0)NM2.2x- 41Gravity Co., Ltd9/30/2008GRVYNasdaqGMUSDSouth Korea0.7019.5 32.7 6.3 19.2%-- 636Gree, Inc.6/30/2008TSE:3632TSEJPYJapan4,7401,116.5 31.0 11.2 36.0%33.9x- NAGungHo Online Entertainment, Inc.9/30/20083765OSEJPYJapan112,400135.7 107.9 15.8 14.7%1.0x6.9x NAHanbitSoft, Inc.9/30/2008A047080KOSEKRWSouth Korea3,37049.4 46.4 (11.9)-25.6%0.7x- NAIAC/InterActiveCorp.12/31/2008IACINasdaqGSUSDUnited States14.922,102.2 1,445.1 64.6 4.5%0.2x5.4x NAIAS Energy, Inc.10/31/2008IASC.AOTCBBUSDCanada0.021.5 0.0 (0.9)NM-- NAIdeaEdge, Inc.12/31/2008OTCBB:IDAEOTCBBUSDUnited States0.4016.9 0.0 (4.6)NM-- NAiseemedia Inc.9/30/2008IEETSXVCADCanada0.083.3 1.1 (4.4)NM0.6x- NAJumbuck Entertainment Pty Ltd.6/30/2008ASX:JMBASXAUDAustralia0.4012.8 10.1 4.7 46.0%0.8x1.8x 72JumpTV Inc.6/30/2008TSX:JTVTSXCADCanada0.4036.4 11.5 (1.8)-15.3%3.9x- NAKaboose Inc.9/30/2008TSX:KABTSXCADCanada0.3842.6 59.4 4.5 7.6%0.8x11.0x NAKingsoft Co. Ltd.9/30/20083888SEHKHKDChina2.77383.5 106.8 36.1 33.8%2.8x8.2x 1,660Lingo Media Corporation9/30/2008TSXV:LMTSXVCADCanada0.909.3 3.3 (1.4)-42.5%3.1x- NALiveWorld Inc.9/30/2008LVWDOTCPKUSDUnited States0.041.2 11.7 (1.2)-10.1%0.0x- 73LookSmart, Ltd.9/30/2008LOOKNasdaqGMUSDUnited States1.2721.6 69.5 (2.6)-3.7%-- 93Magnitude Information Systems Inc.9/30/2008MAGYOTCBBUSDUnited States0.027.9 0.1 (3.2)NM-- 13Mixi, Inc.12/31/20082121TSEJPYJapan368,000594.8 123.9 47.1 38.0%3.9x10.3x NAModern Times Group Mtg AB12/31/2008MTG BOMSEKSweden112.00840.3 1,499.2 239.7 16.0%0.9x5.4x NAMoggle, Inc12/31/2008MMOGOTCBBUSDUnited States2.0072.6 NM (1.1)NM-- 3MOKO.mobi Limited6/30/2008MKBASXAUDAustralia0.042.1 1.3 (2.0)NM0.7x- NANEOWIZ Games Corporation12/31/2007A095660KOSEKRWSouth Korea33,750217.0 120.6 32.4 26.9%1.7x6.4x NANetDragon WebSoft, Inc.9/30/2008777SEHKHKDChina2.80190.9 95.3 46.3 48.6%0.1x0.3x 1,482Netease.com Inc.9/30/2008NTESNasdaqGSUSDChina18.632,292.5 422.7 274.4 64.9%-- 2,413NeXplore Corporation9/30/2007NXPCOTCPKUSDUnited States0.5027.9 NM (4.9)NM-- 19Ngi Group Inc.12/31/20082497TSEJPYJapan17,18022.4 103.8 32.0 30.8%-- NANorthgate Technologies Limited12/31/2008590057BSEINRIndia38.4527.0 135.5 23.8 17.6%0.2x1.1x 286Open TextCorp.12/31/2008OTEXNasdaqGSUSDCanada31.941,657.7 769.3 195.0 25.3%2.3x9.2x 3,400Openwave Systems Inc.12/31/2008OPWVNasdaqGSUSDUnited States0.8268.3 199.6 (10.2)-5.1%-- 627Perfect World Co., Ltd.9/30/2008PWRDNasdaqGSUSDChina12.20696.0 186.9 99.9 53.5%-- 1,401PhotoChannel Networks Inc.9/30/2008TSXV:PNTSXVCADCanada1.9652.5 13.6 (2.4)-17.7%3.8x- NAQuepasa Corp.9/30/2008QPSANasdaqCMUSDUnited States1.4017.7 0.1 (11.8)NM-- 63OAO RBC Information Systems12/31/2007RBCIRTSUSDRussia0.3041.6 131.7 17.2 13.1%0.0x0.1x NAShanda Interactive Entertainment Ltd.9/30/2008SNDANasdaqGSUSDChina31.982,218.9 478.0 228.3 47.8%-- 2,564Shutterfly, Inc.12/31/2008SFLYNasdaqGSUSDUnited States7.48188.0 213.5 29.8 13.9%0.5x3.4x NASK Communications Co., Ltd.12/31/2007A066270KOSEKRWSouth Korea6,730185.1 138.7 13.1 9.4%1.3x14.2x NASNAP Interactive, Inc.9/30/2008STVIOTCBBUSDUnited States1.0010.7 2.3 0.2 10.1%4.2x41.2x 5SNM Global Holdings9/30/2008SNMNOTCPKUSDUnited States0.000.0 2.0 (0.7)-34.8%1.1x- 33Social Media Venures, Inc.12/31/2008SMVIOTCPKUSDUnited States1.250.0 0.1 (0.1)-60.5%0.1x- NASpark Networks, Inc.9/30/2008LOVAMEXUSDUnited States2.5053.6 60.1 11.7 19.5%0.8x4.2x 176SpectrumDNA, Inc.9/30/2008SPXAOTCBBUSDUnited States0.104.9 0.1 (2.7)NM-- 7 Tencent Holdings Ltd.9/30/2008700SEHKHKDChina46.6510,814.3 903.8 447.8 49.5%12.9x26.1x 6,039 The Parent Company8/2/2008KIDS.QOTCPKUSDUnited States0.020.6 112.0 (13.5)-12.0%0.2x- 347 The9 Limited9/30/2008NCTYNasdaqGSUSDChina13.22365.0 252.5 95.1 37.7%-- 1,361 TheStreet.com, Inc.12/31/2008TSCMNasdaqGMUSDUnited States2.2367.7 71.9 7.7 10.8%-- NA Tree.Com, Inc.12/31/2008TREENasdaqGMUSDUnited States3.9837.3 228.6 (27.0)-11.8%0.2x- NAUniserve Communications Corp.11/30/2008TSXV:USSTSXVCADCanada0.051.0 23.9 0.1 0.4%0.1x31.3x NAUnited Online Inc.12/31/2008UNTDNasdaqGSUSDUnited States4.76390.8 669.4 153.9 23.0%1.0x4.5x NAUOMO Media, Inc10/31/2008UOMOOTCBBUSDCanada0.086.8 0.5 (0.4)-91.6%15.1x- NAVOIS, Inc.9/30/2008VOISOTCBBUSDUnited States0.755.4 0.0 (4.0)NM-- 4Webzen Inc.12/31/2008WZENNasdaqGMUSDSouth Korea1.1313.4 19.1 (1.9)-10.1%-- 330Wizzard Software Corporation9/30/2008WZEAMEXUSDUnited States0.6529.3 6.2 (6.5)NM4.7x- 110WoozyFly, Inc.9/30/2008WZYFOTCBBUSDUnited States0.152.6 0.0 NM NM-- 14Worlds.com Inc.9/30/2008WDDDOTCBBUSDUnited States0.189.4 0.1 NM NM-- 1Wyndstorm CorporationNAWYNDOTCBBUSDUnited States0.122.2 NA NM NM-- NAXING AG9/30/2008O1BC XTRAEURGermany31.00205.5 39.9 15.5 38.8%3.8x9.8x 161YedangOnline Corp.12/31/2007A052770KOSEKRWSouth Korea6,63069.4 45.9 10.3 22.4%1.5x6.7x NAYnk Korea Inc.12/31/2007A023770KOSEKRWSouth Korea4,1006.7 13.0 (1.0)-7.6%0.5x- NAZipLocal Inc.9/30/2008TSXV:ZIPTSXVCADCanada0.010.3 2.8 (3.8)NM0.3x- NAHigh10,814.31,499.2447.8506.8%33.9x41.2x6,039Low0.00.0-27.0-98.9%0.0x0.1x1
Average333.1133.929.017.8%3.6x8.2x626
Median28.636.30.115.3%1.0x5.4x92
 
Figure 1. Web 2.0 Universe Summary Source. Capital IQ 
 
 Page 3
CAPITAL MARKETS ACTIVITY (M&A AND FINANCING)
Twitter raises $35 million:
The largest Web 2.0 financing of the last three months remains the $35 million raised byTwitter (Figure 2). Overall, there have been 20 financings announced in February, totalling $160 million, or $8 million onaverage. The average value for February is above the $6.8 million average for January, with four financings over $15million in February (Twitter, Synthasite, Tremor Media and Offerpal Media) vs. no deals over $15 million in January. Foradditional details, see Figure 30 (at end of note).
Financing - Last Three Months
0.05.010.015.020.025.030.035.040.0
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Feb-09Jan-09Dec-08
 Figure 2. Financings, Last Three Months Source. Company reports 
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