Venture capital (VC) investment in Europe’s next-generation media firms has soared to its highest level in more than two years.

According to research firm Library House, €321.3m (£254.8m) was spent across the continent during the first three months of 2008. The figures represent a dramatic turnaround from the pessimistic sector results at the end of last year, as reported by Computing in January.

Funding for digital content sites had slumped to €154.4m (£121.9m) in the fourth quarter of 2007. The previous three months had seen VC investment leap to €261.7m (£206.5m), the strongest spending levels since 2005.

But the weak figures from the close of 2007 were a blip on the otherwise steady growth of the sector, said Chris Coffman, senior analyst at Library House.

“Our reaction last quarter was that the situation wasn’t as doom and gloom as it appeared,” he said. “There will always be a degree of fluctuation, because figures can be affected easily by big deals. Mediatech is an area that is going to keep growing.”

UK companies accounted for four of the top five European mediatech firms to gain funding during the first quarter. Online gaming firm Realtime Worlds secured €31.6m (£25.1m), a sum nearly matched by price comparison site MoneyExpert.com.

The most successful European venture was German online advertiser Adconion Media Group. It raised nearly €54m (£43m) during the quarter.

Overall VC investment in UK IT and communication companies totalled €312.3m (£246.3m), steady from the €306.9m reported in the same period the year before.