Report: Q1 Venture Funding Stagnates

According to data compiled by VC database VentureDeal, total Q1 venture funding for 2010 stagnated from the previous quarter, with 281 companies raising $1.8 billion in venture capital funding, a decrease of 2% from Q4 2009. The company reported findings on four sectors of technology, Internet, Digital Media, eCommerce, and Software.

Funding to startups in the Digital Media space decreased by 55% to $167 million, with 35 companies being funded, a decrease of 8% versus the previous quarter. E-Commerce on the other hand, saw the biggest jump in funding. For the quarter, 9 commerce companies received a total of $64 million in funding, a whopping increase of 156% in financing amounts versus the previous quarter thanks to massive rounds such as the investment in Boku in January, which totaled $25 million.

Software startup investments ended up as the second largest sector in terms of total amounts, raising $675 million between 109 companies, an increase of 4% in total funding amount and an increase of 3% in the number of companies funded. The largest funding of the quarter was a $110 million round for PowerPlan, which sells fixed asset software.

Internet sectorinvestments continued their previous quarterly increase by rising 13% in terms of total funding. The sector received $902 million in venture capital funding during the quarter allocated among 128 companies, which represents a decrease of 4% in the number of companies funded. Big rounds for the quarter included a $100 million investment in Yelp and $75 million in uStream.

An April report from CrunchBase data also indicated the venture funding had dropped from the fourth quarter of 2009. But it’s interesting to see the e-commerce sector picking up speed in terms of investments. Surely the latest Gilt and Groupon funding rounds indicate that the trend is continuing through 2010.