Venture funding deals hit 11-year low

The venture capital industry took another big hit in the first quarter of the year, according to new data from Dow Jones VentureSource.

Venture capitalists invested just $3.90 billion in U.S. companies during the quarter, a 50 percent decline from the almost $7.78 billion invested during the same quarter last year, according to VentureSource. In terms of actual venture deals, 477 were completed, well below the 706 completed last year and the lowest quarterly deal total since 1996.

Hit particularly hard was the information technology industry, which saw its lowest level of investment since 1997, with $1.68 billion invested in 231 deals for the first quarter. That's a 52 percent drop from the $3.48 billion invested in 370 such deals during the same quarter last year, according to the report. That's also the lowest deal level for the IT industry--the software sector included--since 1995, the report says.

"Technology companies have long been the primary focus of venture capitalists," VentureSource's Director of Global Research Jessica Canning said in a statement. "But with a nonexistent IPO market and corporations paying less for venture-backed technologies, the incentive for investors to back new or unproven business models is just not there."

The report also documents another plunge for the green tech and clean energy sectors, with $189 million in 15 deals during the first quarter, down 59 percent from the $457 million invested in 24 such deals last year.

The report isn't quite as bleak as one released for the fourth quarter of last year from Thomson Reuters and the National Venture Capital Association, which noted a decline in VC funding of 71 percent from the fourth quarter of 2007.

Also for the first quarter of the year, VentureSource earlier this month reported a 65 percent fall in liquidity for VCs.