Seed Money

After nearly three years of decline, the amount of capital invested by venture funds is back on the rise. According to a recent MoneyTree Survey by National Venture Capital Association, PricewaterhouseCoopers and Thomson Venture Economics, venture investments in early-stage companies jumped 43 percent and accounted for more than $956 million nationwide during the second quarter of this year-an increase of $288 million from the first quarter. Since venture funding started its free-fall in 2000, VC firms have been reluctant to invest in new ventures, preferring instead to shore up existing portfolio companies or to invest in lower risk, later-stage companies. This jump marks the first significant increase in early-stage funding since the fourth quarter of 1999.

The results were corroborated by San Francisco VC research firm VentureOne, which showed that start-up funding in the second quarter of this year increased 13.6 percent over the first quarter. The increase in activity is not limited to the VC epicenters of New York and California. Small but meaningful increases were noted across the country and across several industries. A strong surge in biotech and health-care investing led the way.