Venture capital hitting new highs

Even as Hudson Valley entrepreneurs dangled newfangled technologies and services for regional venture capitalists last week in Stamford, Conn., a new report showed that venture investment during the first quarter in New York was among the highest since the collapse of the dot-com bubble.

Fifty-one companies in New York raised $406 million in venture capital in the first quarter, according to the quarterly MoneyTree report published by PricewaterhouseCoopers and the National Venture Capital Association (NVCA), which relies on data from Thomson Financial.

That was up from $337 million in the fourth quarter of 2007, and from $282 million a year ago.

In the past seven years, the only better periods for venture investment were the fourth quarter of 2006, when companies registered $465 million in funding; and $533 million in the second quarter of 2005.

Nationally, venture capitalists invested the fifth highest amount since 2001, or $7.1 billion, despite dropping 9 percent from the fourth quarter of 2007.

“There are certainly economic headwinds out there if you look at the economy, but ”¦ I typically don”™t draw too many conclusions from a single quarter,” said Owen Davis, co-chair of PricewaterhouseCoopers”™ venture capital and private equity practice in New York and Connecticut. Davis spoke last week at the Crossroads Venture Fair in Stamford, which allows venture capitalists to peruse business plans of startups from throughout the Northeast. The event is sponsored by Connecticut Venture Group of Fairfield, Conn.

Several area companies were on hand seeking funding, including:

Ӣ ExeCue of Tarrytown, which is developing search-engine technology.

”¢ SOMS Technologies L.L.C. of Bedford, which is developing a “green” oil filter.

Ӣ Sparta Social Networks of Dobbs Ferry, which is developing technology to support online communities.

Those startups and others hope that the state will resume annual growth in venture capital investment, which was halted last year after three straight years of growth, with 2007 totals falling 11 percent to below $1.2 billion. Economists count on the sector to produce fast-growth companies, particularly for areas outside New York City, much in the way White Plains-based Systems Management Arts Inc. was able to grow to more than 200 employees, before its 2005 acquisition by EMC Corp. for $260 million.

Some technology outposts have produced stellar results in the past decade. From $32 million in 1997, Pittsburgh-area companies received nearly $200 million in venture capital last year. New Mexico and the Seattle region have also enjoyed exponential growth in venture investment during that period.

By comparison, New York”™s venture investment levels last year were nearly 50 percent above the $800 million companies here raised in 1997.

NVCA indicated early-stage investments dropped 17 percent nationally in the first quarter from the fourth quarter last year. That could reflect what has been a difficult market for initial public offerings of stock and mergers, as venture capitalists horde cash to support relatively mature portfolio companies that ordinarily would generate a return for investors in the form of an IPO or sale.