Internet companies offering a variety of e-commerce, advertising and search tools have attracted strong valuations ranging from two times to six times trailing revenues, according to The Internet Sector: 2012 In Review, a report by wealthmonitor that tracks a sector seen as generating a new generation of high net worth individuals.

Internet millionaires pocketed a total of £16.7 billion in 2012, the report said, and the potential .sum could be even higher, at more than £24.8 billion ($38.5 billion). 

The report looked at 15 EU countries in total. Germany has 27 per cent of Europe’s active players in the market followed by the UK at 25 per cent and France at 19 per cent. The study comes at a time when Facebook, the social media site, has announced plans to launch a search engine, the so-called graph search, to explore shared content posted by its friends’ community, including multimedia information such as photos and status updates.

“The appetite for innovative internet technologies is high as is the cash amount that the likes of Facebook and Google are prepared to pay to remain competitive. In 2012 Instagram’s founders turned two years of work into a $1 billion business as the pre-revenue developer of photo-sharing applications sold to Facebook in a record deal,” wealthmonitor said.

“The tax breaks and the recent high valuations for companies in the space have encouraged investors to look at the sector even more closely as an alternative to mature markets,” Giovanni Amodeo, editor at wealthmonitor, said. “Companies are increasingly looking at niche technologies which could give significant yields in the mid-term. Entrepreneurs and wealthy individuals will surely benefit from it in the next few years,” he added.

The firm has information on more than 495,000 liquidity events, drawing from actions such as growth initiatives; initial public offering plans; mergers and acquisitions; succession issues and directors dealings.

wealthmonitor is part of The Mergermarket Group, a division of the Financial Times Group.