Venture capitalists pumped nearly $2.1 billion into Southern California companies in the second quarter, double the amount they invested in the second quarter of last year, a new report says.

The gains were particularly impressive in light of the tech shakeout on Wall Street, where many Internet stocks have been hammered down to half their price—or more—from January’s lofty levels.

The $2.1 billion in Southland investment was divided among 136 companies, compared with $1 billion for 106 companies in the second quarter of 1999, according to data from the Boston-based National Venture Capital Association. The NVCA is a nonprofit trade group that provides quarterly statistics.

Despite months of market volatility, venture capitalists continued to invest in innovative, young companies at record levels, says an NVCA spokeswoman. The pattern in Southern California was repeated nationally, where 1,695 companies received venture funding in the second quarter, compared with 1,627 in the first three months of the year.

Nationwide, venture capital investments increased 96% in the second quarter to $24.5 billion, from $12.5 billion in the second quarter of 1999. Northern California and the Northeast captured the largest percentage of investments, 36% and 21%, respectively, according to NVCA data. Southern California was third.

“Venture capitalists are long-term investors, whose investment strategies are not driven by short-term market fluctuations,” comments Steve Lazarus, NVCA research chairman. “What has changed in recent months is the shift of interest from e-tailing to other technologies that will help move the new economy to the next level.”

Internet-related companies continued to attract the majority of venture capital dollars, with more than 81% in the second quarter, Lazarus adds. However, a smaller percentage of the total dollars invested in Internet-related companies went to e-commerce in the second quarter—14.5% versus 27.2% in the first quarter.

“This trend reflects the tremendous opportunities offered by communications infrastructure companies,” notes Jesse Reyes, vice president of New Jersey-based Venture Economics, which provides data for NVCA. “For the new economy to maintain its current momentum, the communications industry must continue to rapidly expand bandwidth and improve infrastructure rapidly.”

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