Venture Funding Sees a Shift

A quarterly analysis best known as the MoneyTree Report dishes out the latest on venture capital investment and the like. The good news from the second quarter review is that funding remained virtually the same (990 deals and $7.4 billion) as the first three months of 2008 (977 deals and $7.5 billion); the potentially ominous sign was less investment in early-stage companies and more in companies that are closer to commercialization and a payback.

Venture capitalists, like many others, are concerned about the economy. Fewer initial public offerings offer fewer opportunities for a return on that riskier early-stage investment. Money invested in companies seeking their first round of venture funds decreased 12%. Later-stage deals increased 14%.

Software and biotech led the way in number of deals. The big winner among industries, however, was clean technology with an all-time quarterly high of more than $883 million invested, including the top two deals of the quarter at $132 million and $115 million.

The National Venture Capital Association and PricewaterhouseCoopers analyze the numbers and distribute the report. It will be worth watching closely in the next few quarters.