Venture capitalists continued to pour money into online video startups in 2007, even as they were scaling back their investments in most other sectors. NewTeeVee reports that $460.5 million was invested in 68 video startups in 2007, up from $266.9 million in 2006. The pace of VC investment accelerated in the first quarter of 2008, with another $217.3 million going to 29 video startups, which projects to $868 million for the full year. That bucks the broader trend, as overall venture capital investments in 1Q 2008 declined 9 percent from previous quarter and 8 percent from the year-earlier period.
What does this mean for the data center sector? These video startups need infrastructure for hosting, peering and content delivery, and the VC investment provides these companies with capital to invest. The trend certainly bodes well for the CDN sector, and will probably helps sales of 10 Gig Ethernet ports at Equinix (EQIX) and other peering hubs. The downside? Not all of these companies will survive.