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Levels of VC investment in 'Web 2.0' companies doubled last year, according to figures released by Ernst & Young and Dow Jones VentureOne at this week's Web Ventures Conference in California.

The firms say $844m (£431m) was invested in Web 2.0 startups in 2006, compared to $406m (£206m) in 2005.

Paul Fisher has an excellent round-up of European seed and first rounds of VC investment from 2006. He reveals that more then £144 million was raised by 54 European Web 2.0 companies last year.

In his post, Paul points out the rapid growth in investment levels - in 2005, just £24 million was invested into Web 2.0 companies. That figure rose to £79 million in 2006.  

Mike Rundle has written a post called The Catch-22 of Web 2.0 in which he says he feels like “the only person seeing certain things happen – like watching a train wreck in slow motion”.

Mike is a top web designer who makes some cynical points that don’t make too much sense from where I’m sitting.

So let’s go through them one by one…

Is London’s Alternative Investment Market (AIM) the new Nasdaq? This is the question being asked in the US by VC’s such as Charley Lax, of GrandBanks Capital.

The figures speak for themselves. Last year some 519 companies sought a listing on AIM, while there were just 45 IPOs on the Nasdaq.

Why is this happening? The Nasdaq is a larger market, so wouldn’t that be a better place for many VC-backed US companies?