Venture capital funds found 612 companies in which to invest $3.67 billion in Q2. Of this, $1.5 billion (41%) was first-time financing, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. This is only slightly ahead of the action in Q1, in which 141 transactions were first-time, and far behind the pace we enjoyed earlier this decade.

The biotech sector was the big winner in a shrinking market, with funding up 54% to $888 million over 85 deals. The software business was flat quarter-over-quarter at 4644 million over 135 transactions. Investments in internet companies fell 15% to $524 million via 124 deals. Clean technology showed considerable growth, up 15% to $274 million, with 42 transactions closed.

According to the number-crunching from PricewaterhouseCoopers and the National Venture Capital Association, there was an 8% increase in venture funding for 2007 (it's the fourth consecutive increase). That translates into a juicy $29.4 billion.

OK, so where's the action? Of course, there was strength in Web deals as well as biotech (yes, these sectors always seem to need capital).

But, in light of the surge in oil prices, there was a big jump in funding in energy deals and clean technology. That is, the deal volume went from 124 to 187 financings. In all, there was about $2.5 billion invested in the sector. Interestingly enough, one company -- Project Better Place – pulled in a cool $200 million first round.

Oh, and as should be no surprise, it was California with the most deal action. Last year, the region saw $14 billion in financings.

However, with the wrenching volatility in the equities markets, there could be trouble ahead. In such times, it can be challenging for M&A transactions and IPOs, which drive the enthusiasm for venture capital deals.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.