Driven by strong growth in deals for later stage funding, venture capital investments increased to $20.9 billion in 2004, according to a major report issued Monday morning.

The MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association analysis showed the first increase in VC investments in three years after hitting a low of $18.9 billion in 2003.

From a peak of $106 billion in 2000, venture deals had dropped to $41 billion in 2001, $21.5 billion in 2002 and $18.9 billion last year.

The report is the second one in recent days to document the increases for 2004. VentureOne and Ernst &Young reported on Friday that the annual total as $20.4 billion. (For details, see related LTW story: www.localtechwire.com/article.cfm?u=10479 .)

Driving the increase last year according to the Money Tree Survey was strong growth in later stage deals, a sign that hundreds of “dot com” survivors are moving closer to exit strategies, such as initial public offerings.

These 647 deals soared almost 50 percent to $7.2 billion, making up 34 percent of all transactions.

“This represents the largest dollar amount for later stage funding in three years and the largest percentage in the last 10 years,” The MoneyTree report said.

Average deal size climbed to $11.1 million from $9.2 million in 2003, and post-investment company valuations increased to $70.2 million, up from $65.4 million.

“One positive trend here is that mature startups who survived the funding drop during the early part of the decade are now getting the attention and capital they need,” said Adam Reinbach, vice president of Thomson Venture Economics. “While a longer gestation period doesn’t necessarily guarantee positive results, there’s no question that companies with years of operating experience generally make for better exit candidates.”

Fourth-quarter investments surged to $5.27 billion in 2004, the second highest quarter of the year. The second quarter produced $6 billion.

Early stage investments also increased, producing 841 deals, or 29 percent of transactions, and $3.9 billion, some 19 percent of money invested.

When combined with startup/seed funding, more than $4.3 billion was raised compared to $$3.8 billion in 2003.

However, actual startup/seed funding dipped to $346 million last year from $385 million the previous year.

The totals were $500 million higher and 111 more in all than 2003.

For details and more statistics, see:

NVCA: www.nvca.org