Venture deal making soared in 2006

DALLAS — Venture capital investors pumped more money last year into young companies than they have in any other year since the end of the dot-com bubble.

But that doesn’t mean this is Bubble II, industry experts say.

“We haven’t reached the frenzied levels that we saw back six, seven years ago,” said Josh Grove, senior research analyst for Dow Jones VentureOne.

But there’s definitely a lot of money changing hands.

Venture investment levels jumped in 2006, spurred by entrepreneurial activity in areas like Web applications, medical devices and energy.

Nationally, venture capital investments totaled $25.75 billion last year, an 8 percent increase, while Texas investments reached $1.23 billion, a nearly 17 percent jump.

In the fourth quarter, national venture investment fell 2 percent from a year ago to $5.82 billion, while statewide investments rose 35 percent to $308 million.

The data were scheduled for release today by Ernst & Young LLP and Dow Jones VentureOne.

Venture investors have traditionally sought to turn a profit on their investments by having their portfolio companies go public.

But initial public offerings by venture-backed companies have been rare the last several years, even with the overall stock market trending upward.

“The main reason that’s out there is Sarbanes-Oxley,” Grove said, referring to the 2002 law on corporate governance.

“The regulations are just much more difficult for companies to go public these days. “The cost is a lot higher, and it really takes really strong companies to make it out.”