Parse the numbers, and it's clear venture capitalists are retracing the path they trod in the dot-com era -- at least when it comes to which sectors are hot.

The latest MoneyTree Report, prepared by the National Venture Capital Association and PricewaterhouseCoopers using data from Thomson Reuters, reported that investment in Internet companies last year hit the highest level since 2001. And the $7.1 billion pumped into Internet-specific startups accounted for 24 percent of all venture capital dollars last year.

In addition, venture firms put $11 billion into software companies, the most since 2000. Software companies hoovered up 37 percent of total venture capital in 2013 -- the highest percentage since the MoneyTree Report began in 1995.

What's more, software investments rose 27 percent over the previous year, and the number of deals was up 10 percent.

Mark McCaffrey, who heads the global software practice for PwC, said that as recently as 2009, software investing was roughly equal to that of the other traditionally large category, biotechnology. But even though biotech dollars rose 8 percent last year compared to 2012, making the sector the year's second-most popular with VCs, it still took in less than half of software's haul at $4.5 billion.

McCaffrey noted that venture investors appear to be placing their bets on the technologies most in demand on Wall Street and in corporate boardrooms. Enterprise software, including database management and file sharing, launched a number of well-received initial public offerings last year, with more believed to be on the way.


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Meanwhile, Internet content and e-commerce companies were popular targets for mergers and acquisitions, McCaffrey said.

The prevailing winds held steady during the fourth quarter of the year, when software remained the top sector for both dollars invested ($2.9 billion) and number of deals (397 companies). That was nearly three times as many deals as the Media and Entertainment sector, which notched the quarter's second heaviest volume.

Also in the fourth quarter, $2.4 billion went into 273 Internet-specific deals. That category is assigned to companies whose business model is "fundamentally dependent on the Internet," regardless of whether their primary industry category is software, media or other.

In all, 10 of the MoneyTree Report's 17 industry categories saw increased investment for the year. Among those scoring some of the biggest percentage increases were Networking and Equipment (111 percent), Financial Services (100 percent) and Business Products and Services (61 percent).

For the full year, venture firms invested $29.4 billion in 3,995 companies around the United States. That was a 7 percent uptick in dollars, and a 4 percent increase in deals, compared to 2012.

With the IPO market humming, and a number of private companies sporting $1 billion valuations, John Backus of New Atlantic Ventures sees good things ahead in the new year.

"There's a lot of value built up in VC portfolios right now, and this is a really good indicator of strong returns to come," he said. "I'm going to boldly predict that VC industry returns (in 2014) will hit a 10-year high."

Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.