Power up in Q2 Web 2.0 down

Venture capital outlays held steady during the second quarter as U.S. investors poured $6.34 billion into 855 startups, up slightly from the $6.3 billion invested in 802 companies during the same period last year, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Financial (publisher of PE Week) and the National Venture Capital Association.

The dollars invested may have held constant, but there are signs of rebounding investor optimism. VCs increased their commitments to early and seed stage deals during the quarter, investing $292 million into 74 companies, up 33% from the $219 million put into 58 startups during the first quarter.

Next generation consumer Internet plays dont seem to playing much of a role in the early stage resurgence. The number of Internet Multimedia Services companies funded during the second quarter fell by nearly half. VCs backed just eight startups with $25 million during the quarter, compared to $57 million invested in 15 companies during the first quarter.

However, VCs were charged up over energy as investors backed 25 companies in the sector during the second quarter, up from seven deals during the same quarter last year. In all, 28 energy deals were done in 2005. The amount of money invested in alternative energy increased 300% according to research by Dow Jones VentureOne and Ernst & Young LLP.

And there appears to be no let up in energy investing in the months ahead as LP interest focuses on the space, especially in the red-hot sector known as cleantech, which has drawn investments from new and established firms.

Health care investors have been busy as well. Startups in biotech, medical devices and health services raised $2.4 billion during the quarter, up 25% from $1.8 billion invested during the same period last year. IPOs may be spurring investment, as 16 of the 23 venture-backed IPOs from the first half of 2006, or about 70%, were life science startups. Thats way up from last year, when health care companies made up less than 50% of 56 IPOs.