Tracking the deals: Local Tech Wire’s exclusive lists:

Nearly $400M Invested in Carolinas, Georgia:

Two Dozen NC Companies Get $120M:

Georgia Firms Get $260M:

RALEIGH … The downward roller-coaster has started again for the venture capital industry.

After a brief glimpse of stability in the fourth quarter of 2001, venture investments nationwide tumbled again in the first three months of this year, from $7.1 billion to $6.2 billion, according to the latest MoneyTree Survey by the National Venture Capital Association, accounting firm PricewaterhouseCoopers and the Venture Economics research firm. The drop-off marks the sixth time in the seven quarters since the dot-com boom ended in mid-2000 that venture investing has fallen across the country.

Fewer than 780 companies across the country closed a venture deal in the first quarter, down from the almost 1,000 that obtained venture funding in the previous quarter, the MoneyTree Survey shows.

“I had hoped that we had found the bottom of the market at the end of last year, but I guess we’re still looking for it,” says Jeff Barber, who heads the Carolinas technology practice for PricewaterhouseCoopers. “Any recovery is going to take a while, but it looks like this is going to take a lot longer than anyone thought.”

NVCA officials are quick to point out that the current pace of investing is comparable to 1998, right before the Internet bubble inflated the size and frequency of venture deals.

Southeast down as well

First-quarter figures for North Carolina, which will be released in two weeks, are tracking the national trend, Barber says. In Georgia, PricewaterhouseCoopers officials say the 20 deals done in the Peach State was the fewest first-quarter investments in five years.

Preliminary numbers compiled by Local Tech Wire show that 28 venture deals were completed in the Carolinas and Georgia in the first quarter, down from 43 deals at the end of 2001. But a couple of large investments pushed the value of the first-quarter deals slightly above those of the previous quarter.

LTW data shows that just one-fourth of the first-quarter deals were seed or first-round funding, as regional venture firms continue to stick to their knitting and try to guide their portfolio companies through the slumping economy. MoneyTree statistics paint a similar picture across the country, where 26 percent of the deals and just 19 percent of the dollars invested went to early-stage companies.

“This is a market where, if you’re an entrepreneur with a new company, you try to make things go as far as you can on your own before looking for venture capital,” Barber says. “Most VCs are looking for deals outside their portfolio, and any that are, are just looking at the cream of the crop, the companies that are already fairly established.”

Major sectors all hit

The first-quarter decline hit all major technology sectors, with software companies attracting $1.1 billion in investments, down from almost $1.6 billion in the fourth quarter. Biotechnology companies dropped from almost $1 billion in fourth-quarter venture deals to $752 million. Companies engaged in information technology services saw the largest decline, falling 45 percent to $235 million.

But this being an industry populated by entrepreneurs and financial gamblers, optimism is hard to beat out of it. People are pointing to a slew of deals in the past month as evidence that the industry is ready to turn the corner during the second and third quarters.

“I think we’ll get back on track later this year,” Barber says. “There are still good deals out there.”

For a copy of the national MoneyTree Survey, visit: