We have heard for years that investors are sitting on the investment sidelines with boatloads of money. Has Mr. Z from Facebook started a tidal wave of investing in tech companies with big potential?

It must be interesting for investors doing valuations on companies that have millions of users but no profit. Companies such as Google and Facebook have shown that there is money to be made advertising to users. I think this is what many of these companies and investors are banking on looking at the analytics for these types of companies since targeted advertising is where money can be made. With Instagram just being purchased for 1 billion dollars, the question on many people’s minds is, who will be the next Instagram?

Five tech companies to watch as an investor over the next year are:

Pinterest1) Pinterest – A virtual pinboard site. Users can comment on each others posts.  E-commerce friendly. Their user base has grown from 2 million to 19 million in the last 6 months. According to Business Insider their valuation has grown from 200 million in October to 1 billion in April. Pretty good growth!

Fun Facts: Founders Paul Sciarra and Ben Silbermann sent 200 emails asking for funding. Over half them went unopened. Perhaps a little regret for those left with unopened emails.

Tumblr2) Tumblr – Blogging service that uses and integrates social media very well. 30 million blogs are on Tumblr which is up from 8 million last year. In September Tumblr was valued at 800 million. John Lilly of Greylock Partners says, “Tumblr is significantly bigger than Pinterest on almost every single metric”

Fun Facts: Founder David Karp dropped out of high school at 15. One of the investors is Richard Branson.

Dropbox3) Dropbox – A service that allows users to store and share files online. They will be a targeted by companies that need to make a splash in cloud-based services. Based on recent round of financing they would be valued at 4 billion according to the Wall Street Journal.

Fun Facts: 1 billion files are saved every 3 days on their service. Co-founders Drew Houston and Arash Ferdowsi both attended MIT but Ferdowsi dropped out. He seems to be doing okay.

Pinger4) Pinger – This is a free talk and text service that operates independent of wireless carriers. Pinger works across Apple iOS and Google’s Android. They could be a target for a company such as AT&T or Verizon.

Fun Facts: One of the top five installed apps on Apple’s iOS platform. CEO Greg Woock used to work for Richard Branson.

Spotify5) Spotify – Users create free accounts where they can listen to  specific songs rather than genres or stations. Recent valuation at 3 billion according to media reports. They have partnered with Facebook for a streaming music service. Rumours have Google and Amazon knocking on Spotify doors as well.

Fun Facts: CEO Daniel Ek founded his first company at 14. He and co-founder built up Spotify from Sweden. Sean Parker is an active board member.

I think this is going to be an exciting year for technology companies. 2011 could be the year when m-commerce begins to take shape for many of them.

If you had a 1 million to invest, which company would you invest in?

Have you used any experiences with these five products? What were your experiences?

Do you think you think there is a benefit to finishing University if you are technology entrepreneur?

Next month we will focus on Canadian tech companies about to make a breakthrough.