Venture-capital investing has flattened out in the first quarter of 2005 in Washington State where Silicon Valley remains the focus of venture capitalist activity but analysts have an optimistic outlook.

In the first quarter of 2005, 16 Washington-based companies obtained $106.9 million, against 15 companies and $93.5 million in the fourth quarter of 2005 and 23 companies that pulled in $241.9 million in the first quarter of 2005.

All 474 U.S.-based companies received $4.6 billion, compared to the first quarter of 2004 when 521 companies received $5.4 billion, according to the report of VentureOne and Ernst & Young.

Venture capital investing is one of the riskiest investment types, where investors receive stock of a company. If if fails, they will in most cases get nothing or very little.

Analysts explain the fluctuation by the shift of venture capitalists to younger companies that require smaller investments. Besides, it is difficult to gauge the level of activity in a business when two or three major deals can influence the numbers.

"Strength in early-stage rounds reflects the positive company-formation environment that we see on the ground in Silicon Valley and other hotbeds, where proven entrepreneurs are succeeding in securing capital to launch companies," said Robb Browne, Ernst & Young’s venture capital adviser group leader in Silicon Valley.