Investors gave US$27 million to start-up and seed companies in the networking space in Q4 2008, about a third of the amount invested in the previous quarter and a fifth of the amount invested in the last quarter of 2007, when startup investments exceeded $136 million.

Additionally, the $27 million was the lowest quarterly total seen in 14 years of data provided to Network World by Pricewaterhouse Coopers (PwC) and the National Venture Capital Association, authors of the quarterly MoneyTree Report.

The groups track U.S. venture capital investments across all industries, and provided Network World with data specific to networking vendors, including makers of hardware, telecom products, network-related software and Internet-related technology.

Venture capitalists gave $1.8 billion to networking companies in Q4 2008, slightly less than in the third quarter, but nearly all of that went to early stage, expansion and later stage companies, as opposed to newly founded startups. This continues a in which VCs are avoiding new companies because they have not yet gained liquidity on previous investments.

"There's still a good appetite for these [networking] companies," says Tracy Lefteroff, a global managing partner of Pricewaterhouse Coopers (PwC). "But in the longer term, until you see some liquidity, I'm not sure you're going to see a rampup of new investment in the area."