Venture capital funding up

Venture capitalists invested $7.1 billion in U.S. start-ups in the second quarter, up 3% from a year earlier, according to data released Monday by Thomson Financial, PricewaterhouseCoopers and the National Venture Capital Assn.

The amount invested was spread across 977 deals, the most completed during a three-month period since the third quarter of 2001. Back then, high-tech financiers were opening up their wallets in last-gasp efforts to rescue start-ups scrambling to survive the dot-com bust.

Venture capitalists more recently have been hustling to find promising ideas that could lead to lucrative payoffs in two to five years, either through an initial public offering of stock or a start-up’s sale to a larger company.

“The pace out there is definitely brisk, and it’s felt that way for the past 18 months or so,” said Charles Moldow, a general partner with Foundation Capital in Menlo Park, Calif.

Start-up backers this year are on track to invest the largest sum since 2001.

Much of the recent investment has been flowing to start-ups focused on software, biotechnology, medical devices, the Internet and alternative energy.

In the second quarter, the software sector led all industries by raising $1.53 billion from venture capitalists, a 9% increase from last year. Biotech start-ups received $1.18 billion, up 3%. Internet firms took in $896.6 million, up 6%.