The total value of venture capital (VC) invested into the technology sector in the first half of 2006 increased by #534.7 million on the levels invested during the equivalent year-ago period, according to new research.
Datamonitor’s Technology Finance MarketWatch tracked 602 investment deals into technology companies in the first six months of the year, a rise of nearly 100 deals compared with activity over the same period in 2006 when 513 transactions were recorded.
Datamonitor’s report takes an in-depth view of the activity in the technology sector, tracking mergers and acquisitions and VC investments made in the IT sector, and listing the fluxes in the financial performance of 500 of the biggest vendors of software, hardware and network equipment, consulting and professional services firms, and telecoms and carrier services companies.
It incorporates an extensive data table which is updated daily and charts all the key financial metrics of the Tech500.
For those cases where the level of the funding was disclosed, the total investments in the first half of 2006 ran to #3.68 billion, up on the same period in 2005 when deal values amounted to #3.12 billion.
Trying to predict the emerging "hot" sector is a difficult job at the best of times but convergence has been a hot topic for some time now.
"VC's have been especially interested in anything to do with the digital home, such as IPTV, home entertainment, and other multimedia products for the home," said Tom Jowitt, senior analyst for technology finance at Datamonitor.
Other areas of interest include online advertising and broadband.
The advent of "web 2.0" is also of interest to the investment community, and social networks with a strong angle to drive traffic are attracting investments, the firm added.
"Interest in the VoIP sector remains, although as the case of Vonage demonstrates, this is a difficult sector to crack," said Mr Jowitt.
"That said, the sale of Skype to eBay last year provided a terrific return on investment for its VC backers, but this is a relatively rare case.
"In the main, exit strategies remain limited, mostly due to the fussy IPO market in the United States. Most investors still see trade sales as their most obvious exit."
The biggest deal of the first half saw the youth-centric Amp'd Mobile virtual network startup picking up #80.2 million in financing from the venture arms from both Intel and Qualcomm.
This brings the total amount invested in Amp'd to over #133.6 million. Previous big-name investors include MTV and Universal Music Group.
Current Communications Group was the other notable winner of the first half, with the broadband-over-power lines company securing #69.5 million in funding from the heavy hitters of TXU Corp, Earthlink, General Electric, Google, Goldman Sachs & Co and The Hearst Corp.
Mr Jowitt said: "The data shows that investor interest in the technology sector remains undiminished. The total value of these deals has also increased dramatically signaling that the VC community is willing to invest increasing levels of funding into the tech sector."