According to the Quarterly Venture Capital Report released today by Ernst & Young LLP and Dow Jones VentureOne, the venture capital markets are heating up again.  However, Texas does not appear to be the biggest beneficiary of this new infusion of capital. On a national level, U.S. companies received venture financings of $7.4 billion, an increase of 8% over the same period last year. Other stats from the report are that the median deal size in the second quarter of 2007 reached $8 million, up from the $7.4 million seen during the same time last year and the highest median seen since 2000. The quarterly deal count reached 717 deals, the highest deal volume since 2001.

The $233M raised in Texas during the second quarter is down 15% from last quarter and down 30% from a year ago. In the regional rankings, Texas has slipped to 8th among regions raising venture money, behind stalwarts Bay Area and Southern Cal and 5 others (New England, New York Metro, Washington State, Potomac and Colorado). The overall climate of the state is obviously not good news for a city that was recently named one of the five "Startup Hubs" in the US by Fast Company magazine.

Austin does seem to be on a bit of an upswing raising $172M, accounting for 70% of the venture capital raised in Texas. That’s up from $67M in Q1, but slightly down from the same quarter last year of $197M.   

Considering that Google, PayPal, HP and Apple are all expanding their presence in Austin, one hopes that the 1st quarter was just a hiccup and that the entrepreneurial spirit of Austin remains strong.

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