Despite several big investments in online companies (Notably Yelp and UStream) venture capital backing of internet and software firms was flat during the first quarter of the year, according to data compiled by VentureDeal (via ReadWriteWeb).
To blame, according to the venture capital database: A big drop-off in the amount raised by digital media firms, a category which it defines as encompassing ad networks and video/casual game developers. Apparently, no need for alarm, though. The fourth quarter digital media figure was exceptionally high due to Zynga’s big $180 million funding round and VentureDeal describes the new number as “a more normal funding level.” In fact, the number of digital media VC deals stayed relatively flat (35 vs. 38) and the related wireless/telecom/communications sector — which VentureDeal tracks separately — showed substantial gains. Still, a reminder that while venture capital dollars may no longer be on the decline the bulls aren’t out yet.