"As expected, software was still the largest quarterly sector despite the 10-year low," says Tracy Lefteroff, global managing partner, venture capital and private equity practice, at PricewaterhouseCoopers.

Also among the top five categories, which Lefteroff says comprised 71 percent of total VC investments, are biotech, industrial/energy, medical devices and equipment, and media and entertainment.

The overall IT realm pulled in $13.3 billion in VC money in 2008, $4.9 billion of which flowed into software investments, $2 billion into media and entertainment, $1.8 into IT services, $1.6 billion toward telecom, $1.6 billion into semiconductors, $644 million to networking, and $573 million went into electronics and instrumentation.

What's more, $1.3 billion went to startups being funded for the first time, PwC's Lefteroff adds. "Any suggestions that the industry has turned away from early stage companies is unfounded," explains John Taylor, vice president of research for the NVCA.

Pascal Levensohn, founder and managing partner at Levensohn Venture Partners, pointed out that , including smart grid, cyber infrastructure, and national broadband, hold the promise of keeping money flowing into the technology industry.