Members of technology communities in the Carolinas and Georgia who want to watch the sun setting on their dreams of becoming a tech Mecca rivaling Silicon Valley or Boston just need to look west.

Or they could take a glance up north.

Either direction would turn up regions when venture firms are investing more and more cash in startups, as the Southeast’s market share of national venture capital continues a slow and steady decline.

The Southeast attracted 6.2 percent of the $36.5 billion in venture capital invested across the country last year, down from 11.7 percent of the $6.3 billion national total in 1995, according to the MoneyTree Survey by the National Venture Capital Association, accounting firm PricewaterhouseCoopers and research firm Venture Economics.

During the first quarter of 2002, the drop-off continued, with the region bringing in just 4.9 percent of the $6.2 billion invested nationwide. The Southeast region includes the Carolinas, Georgia, Florida, Alabama, Mississippi and Tennessee.

The decline seems to have caught many area venture capitalists off guard.

“I hadn’t realized it had dropped from 11 percent to 6 percent,” says Mitch Mumma of Durham-based Intersouth Partners.

Yet they don’t seem fazed by it.

“I don’t get the impression from talking to friends in Boston or the West Coast that times are any harder in Carolina than elsewhere,” says Walter Wilkinson of Charlotte-based Kitty Hawk Capital.

Lose place in line?

Jeff Barber of PricewaterhouseCoopers has been sounding the warning bells of North Carolina’s shrinking slice of the venture pie for a while now. The state has traditionally garnered between 1.5 and 2 percent of the national investment total, but only saw 1 percent in the first quarter.

“If you’re not growing at the same rate as everyone else, you lose your place in line,” Barber says.

A number of places have been cutting in front of the Southeast in recent years, including Texas, San Diego, New York and Washington, D.C. All used to lag far behind the Carolinas and Georgia in the size and number of venture deals, but they now have either caught up with the region or passed it by.

Texas, for example, obtained about 5 percent of the venture capital invested in 1995, but that was up to almost 8 percent last year, according to the MoneyTree Survey.

Investments in the New York area jumped even more, from 5 percent of the national total seven years ago to 9 percent in 2001, the report shows.

Jeanne Metzger of the National Venture Capital Association says the Internet boom of the late 1990s brought attention to such “second-tier markets,” as investors sought out deals. As the boom has faded in recent years, these markets have staked out their place as solid venture locales, she says.

“Investing has kind of broadened out over the past few years and isn’t concentrated as much in a few areas, other than Silicon Valley and Boston, as it used to be,” Metzger says. “The Southeast may be declining, but it’s still getting a smaller piece of a much bigger pie. It’s not like the investments have completely dried up in the region.”

Why the decline?

That’s a point area venture capitalists are quick to make as well, although they aren’t quite sure why the Southeast isn’t as dominant a player in the investment industry as it was several years ago.

Theories run the gamut from the aftermath of last fall’s terrorist attacks to investors waiting for the economy to improve to a dearth of major funds in the region.

Bob Diemar, who left a job on Wall Street this spring to join Durham-based Southeast Interactive Technology Funds, says the Southeast remains an attractive target for outside investors. He recently spoke with a Connecticut-based fund that is looking to “get onto our scene” and may do some deals in the area.

“I think most of the deals getting done today are in the centers of venture capital, but that doesn’t mean people won’t go away from home a bit for a good deal,” Diemar says.

Mumma points out that Merix Biosciences raised $40 million last summer, mainly from venture funds from outside the region. Much of the money that has gone into big Atlanta deals this year, like Movaz Networks and Inhibitex, also came from such “foreign” sources.

“Venture capital is a regional game at the early stages, and you’re just not seeing a lot of early deals done these days because firms are focused on working with their existing portfolios,” Mumma says. “We’re still importing a lot of capital for later deals, but it’s much harder in the post-9/11 world.”

Still, Wilkinson believes the Southeast will rise again once the economy rebounds.

“There’s a lot of money sitting on the sidelines in funds waiting for the right deals and the right time,” he says.