US investment in IT startups rose to $4.1bn (£1.9bn) during the second quarter of 2007, representing year-on-year growth of 10 per cent.

The software market received the majority of the funding - $1.5bn (£728m) across 179 of the 435 recorded deals for the quarter - according to data from researchers Dow Jones VentureOne and Ernst & Young.

The information services sector, which includes networking sites and similar Web 2.0 facilities, is also a significant growth area, rising 52 per cent to $979m (£475m).

Investors may have been encouraged by coverage of recent high-profile deals, such as Google's purchase of You Tube at a cost of $1.65bn (£800m), says the report.

'It is the second quarter in a row that we are seeing a record number of deals being done in the information services space, and this is due in part to the high-profile liquidity events we have seen over the last year,' said Ernst & Young Venture Capital Advisory Group director Joseph Muscat.

'With Web 2.0 companies able to fully develop products and begin generating revenues very quickly, with comparatively small amounts of capital, they are certainly seen as lower-cost investments with a high potential for return,' he said.

The total figure for venture capital investment leapt eight per cent to $7.4bn (£3.59m), the highest for any single quarter since 2001 and an 8 per cent rise on 2006.

The quarterly deal count also rose eight per cent to 717, the highest figure since 2001.