Funding for startups rose 19 percent in the fourth quarter as venture capitalists fueled money into more companies in the Internet, clean technology and other sectors.

According to a study released Friday, startup investments grew to $6.57 billion in the October-December quarter from $5.52 billion in the same period in 2010. The volume of deals, though, did not keep up with the amount of money invested. There were 844 deals completed in the fourth quarter, down from 861 a year earlier.

Called the MoneyTree report, the study was conducted by PriceWaterHouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

“As previously projected, venture capital investing in 2011 exceeded 2010 levels and ranks in the  top three years for VC investing in the past decade,” said Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers.

“We saw a resurgence in investments in Clean Technology and Internet-specific companies in 2011, as well as a bit of a jump in average funding in the Internet sector. However, while venture capitalists continue to show their interest in these areas, they are acting prudently and not chasing excessive valuations. Accordingly, despite the increase in investing, we’re unlikely to see these sectors overheat like we saw in the 1999 to 2000 era.”

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For all of 2011, venture investments jumped 22 percent to $28.43 billion, in 3,673 deals. That’s up from $23.26 billion in 2010, when the money went to 3,526 deals.

However, Dow Jones Venture Source reported a 6 percent increase in deals to 3,209 with investment growing to $32.6 billion, up 10 percent from 2010.

In the fourth quarter, Dow Jones reported $7.4 billion across 803 deals.

Venture capitalists piped $133.9 million into 80 seed-stage companies in the fourth quarter. That’s down from $233.2 million going to 90 such startups in the fourth quarter of 2010. The decline suggests some caution on the part of venture capitalists looking at the newest, often most risky, startup investments.

A total of 364 early-stage companies snapped up $2.27 billion in venture funding during the quarter. That compares with $1.48 billion going to 318 early-stage startups in the last three months of 2010. The report said 222 companies in the expansion stage received $2.36 billion in funding, compared with 270 companies snagging about the same amount a year earlier. In the later stage, 178 startups received $1.8 billion in the fourth quarter, while $1.4 billion went to 183 companies a year earlier.

Note of Caution

“While venture capital investment grew in 2011, it is important to note that deal volume growth did not keep pace with dollar growth,” said Mark Heesen, president of NVCA.

“In most industry sectors, round sizes increased significantly, driving the higher investment levels across most stages of investment. Reasons for this phenomenon differ depending on area of investment.

“For some, the higher rounds are driven by the challenging exit market which requires venture capitalists to fuel their existing portfolios longer and at greater investment levels than in the past. This is particularly acute in the life sciences and clean tech sectors.

“In other sectors such as Internet, software and media, the higher rounds speak to increasing valuations. Given the diversity of the venture investment landscape, we expect these notable distinctions to continue into 2012 as our industry sectors are impacted differently by the continued economic uncertainty and ongoing opportunities in the market.”

Cautious Optimism

By industry, software companies received the most funding with $1.76 billion snagged in the fourth quarter, followed by biotechnology with $1.27 billion.

San Francisco-based internet storage locker Dropbox Inc. got the single-largest investment during the quarter, $250 million. In second place was Better Place Inc., which is based in Palo Alto and builds infrastructure and systems for electric vehicles, with $200 million.

John S. Taylor, head of research at the National Venture Capital Association, said the figures show “cautious optimism.”

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