U.S. investment in Web 2.0 companies reached record levels last year, but the rate of deal growth slowed, possibly signaling that the sector is “maturing,” according to a report released Tuesday.

Dow Jones VentureSource, a unit of Dow Jones focused on venture capital, found that VCs pumped a record $1.34 billion into 178 Web 2.0 deals in the U.S. in 2007, up nearly 88 percent over amounts invested in 2006.

But 22 percent, or $300 million, of that funding went to one company—social network Facebook—and the rate of deal growth slowed. From 2002 to 2006, Web 2.0 deal flow doubled every year, according to Dow Jones, but the number of deals increased by only 25 percent to 178 in 2007 from 143 in 2006.

“2008 may be a make-or-break year for many Internet companies with business models relying on advertising,” Jessica Canning, director of global research for Dow Jones VentureSource, said in a statement.

Web 2.0 companies—like social networks MySpace and LinkedIn—generally offer free access to their web sites while expecting to make money from online advertising.

Ms. Canning said the slumping economy, coupled with a slowdown in click-through rates for online advertising, could pose a challenge for companies to generate revenue. That would make it more difficult for an ‘exit,’ such as an initial public offering or acquisition, the ultimate goal of the venture capitalists making the investments.

Dow Jones’ research also found that much of the financing growth last year happened outside the San Francisco Bay Area, the traditional home of Web-related innovation.

The number of Bay Area deals declined to 72 from 74 in 2006, although the total amount of investment grew by 67 percent to $721 million last year. But $344 million of that was a result of investment in two companies—Facebook and Ning, both of Palo Alto.

Meanwhile, nearly all other U.S. areas studied by Dow Jones—including New England, New York Metro, and Pacific Northwest—grew more rapidly in the number of deals and the amount invested. See the chart below, provided by Dow Jones VentureSource.

U.S. Web 2.0 Investment by Region, 2006-2007