Plenty of bed rest and recovery for venture capital portfolios has restored some colour to erstwhile ailing late-stage companies.

According to recent figures released by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association, US start-up businesses received $5.6 billion (€4.6 billion) from venture capitalists in the second quarter of 2004, a two-year high that sees the upward trend in funding continuing. According to the statistics, VCs invested heavily in early-stage companies, with 229 companies receiving $1.17 billion (€960 million) in first-time financing, the largest dollar amount invested in that sector since the first quarter of 2001.

Later-stage financing remained healthy. Investments in those companies for the second quarter of 2004 accounted for $1.6 billion, or 28 percent of all investing, down from 31 percent in the previous quarter. Average funding per company was $11.3 million, up from the $9.6 million average of the last four quarters. The survey also showed an increase in valuations.

In fact, the increase in early stage financings bodes well for the many companies that have already received several rounds of financing. Market analysts believe this indicates that later stage companies are now more likely to be selfsustaining.

The later-stage financings that have occurred recently are less related to triage and more tied to growth initiatives and pre-exit positioning though some companies still need a little cash to sustain themselves through to an exit.

Here are some recent financings from the more advanced letters of the alphabet: in August Edison, New Jersey-based Vonage, which provides broadband phone services commonly referred to as Voice over Internet Protocol (VoIP), snagged a whopping $105 million in series D funding, with Menlo Park, California-based New Enterprise Associates leading the way with a $40 million commitment. NEA was joined by fellow return backers like 3i Group and Meritech Capital Partners.

The large round, which follows a $40 million series C financing earlier this year, is due in part to a resurgence in interest the sector, spearheaded by the launch of Intel's $200 million Digital Home fund. Harry Weller, a partner in NEA's Reston, Virginia office, says he expects the VoIP sector to grow significantly over the next several years, representing a significant portion of the consumer telephony delivery market. Weller adds that the later stage funding will help Vonage market its services on a broader basis and expand its customer base.

Another example of buoyant health in later-stage financings comes from the consumer sector – dotcom survivor, a wine seller formerly know as eVineyard, which managed to raise $20 million in a series F round recently in what is seen as a final round of VC funding before an exit.

One late-stage company to benefit from renewed enthusiasm for growth investing is Silicon Optix, a San Jose, California-based semiconductor operation that announced a $40 million series C round in September led by InterWest Partners and Apax Partners.

Alex Wong, an IT partner at Apax, says the financing went to support a newly launched product. In addition, he says Silicon Optix was able to garner so much capital in a later stage because “it is harder and harder to find semiconductor companies with a big market and a differentiating technology that aren't already in spaces that are super-crowded. As a result, more money tends to gravitate towards companies that have these elements.”

Certainly a company that made it through the tech meltdown on series A, B and C might be well worth some D, E and F money.