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At least the slowdown in venture capital investing appears to be slowing down. That’s the good news from the latest quarterly report on private equity investment from the PricewaterhouseCoopers MoneyTree Survey in partnership with VentureOne, which came out earlier this week. In the second quarter of this year, companies pulled in $8.2 billion in venture funding, according to the survey. That’s only a 21 percent drop from the first quarter — peanuts compared to the 41 percent decline in the first quarter of 2001. So if venture investing in companies had to fall for the fifth straight quarter, at least the dips are shrinking. Just don’t expect delirious cheering quite yet from Silicon Valley tech firms. “It’s good news, but I don’t think it shows a dramatic change,” said Donald Keller Jr., a Venture Law Group partner in Menlo Park, Calif. “We are seeing more activity,” Keller said, but he cautioned that any comeback of the tech economy will be a subtle one. “I don’t think we’re going to wake up one day and say, ‘We’re out of this,’ and we’re not necessarily going to notice that we’re climbing out.” Apparently, VCs are still plugging away at investing while corporate players have almost pulled out completely. According to the survey, VCs put up 90 percent of the investment capital in the second quarter of this year. Meanwhile, when equity investing peaked early last year, VC represented 76 percent of the capital circulated. “In the first few months of this year, people were paralyzed. Now, valuations have finally gotten to the level where they feel they should be, so [venture capitalists] feel more comfortable about jumping back in,” Keller said. The MoneyTree Survey findings also suggest VCs are nursing their existing portfolio companies along while eschewing startups and early-stage investments. In past surveys, younger companies have drawn about half of the capital pumped into companies overall. Last quarter, they pulled in only a third of the total capital invested, and later-stage investing increased by 8 percent to $2.8 billion. While Internet- and telecommunications-related companies saw less capital come their way, life sciences and healthcare companies are enjoying greater popularity. Investment in these companies increased by 6 percent to $1.2 billion. “It’s not crazy at all, but at least there’s some comfort that people are looking at the space and have money to spend,” said Alan Mendelson, a Latham & Watkins partner who counts a large cache of life sciences companies as clients.

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