Venture capitalists have renewed their love affair with U.S. research-based start-up companies, according to a new report from the policymaking body of the National Science Foundation.
Private investments in these powerful engines of economic growth plummeted after the 2008 recession, says the National Science Board in a white paper that supplements  the 2012 edition of NSF's biennial Science and Engineering Indicators. "But we have begun to see some recovery," says Arthur Reilly, co-author of the report and retired senior director for strategic technology policy at Cisco Systems.
Recent data not included in Indicators show a 45% jump in overall U.S. venture capital between 2009 and 2011 (see chart 1 and chart 2 ). The $29.1 billion invested last year is the highest total since 2007, when investors poured $31.8 billion into science and technology enterprises. The $20.1 billion invested in 2009 was the lowest amount since 2003.
Investors are still wary of taking big risks in a company with no track record, says Reilly, noting that spending on such "seed" investments has not recovered from its 2007-08 levels. But that category represents less than 5% of the total amount of VC investments. Investments in slightly more mature companies, labeled "early stage" (about one-quarter of the total), are up 70% in the past 2 years.