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VC Money Trickles Back

A recent venture capital survey conducted by VentureOne and sponsored by Ernst & Young says U.S. VC funding may be back on the uptick

Just over $3 billion was spent in the United States on information technology by VC investors in the second quarter of 2004, spanning 294 financing rounds, says the Ernst & Young/VentureOne Quarterly Venture Capital Report. That's up from $2.75 billion spent in the first quarter, which was spread more thinly in 307 rounds.

While investment is up overall, it's still a far cry from the dotcom bubble levels. The $5.8 billion over 601 rounds in the first half of this year was higher than the $5.3 billion in 609 rounds for the first half of 2003, but well under the first half of 2002's $7.2 billion in 692 rounds. As for 2000, if you find it shocking, then you weren't there: $31.2 billion in 1,995 rounds.

For IT deals, the second quarter of this year also saw a median round of $8 million. That makes it the third consecutive quarter of growth and the highest median since the second quarter of 2001, which was also at $8 million. Broken down by industry sector, 2004 second-quarter medians were $10 million for communications and networking; $10.1 million for electronics and hardware; $5 million for information services; $10 million for semiconductors; and $7 million for software.

Communications and networking companies were among the biggest VC deals of the quarter. The fattest round for the second quarter of 2004 was $122 million for the financial analysis/management firm, RiskMetrics Group. Force10 Networks enjoyed the next biggest haul, with $75 million; and $70.1 million went to Mahi Networks.

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