VentureBeat

European venture investments continued their decline in the second quarter of 2008 — there were only 167 deals completed, the fewest in at least nine years. A total of EUR 858 million was invested in Q2, marking a 35 percent drop from the same period last year, according to Dow Jones VentureSource.

That drop is particularly dismal when you realize that 2007 wasn’t exactly a banner year for venture investment either; in fact, it also represented a record low. As in the United States, where VentureSource’s numbers show VC investment falling by 31 percent during the first six months of 2008, analysts blame the dearth of venture dollars on the weak market for IPOs and mergers/acquisitions. At least Europe appears to have one advantage — unlike the U.S., where most of the money goes to sustain older companies as they wait for the public markets to improve, 44 percent of European investment went to early-stage deals, the highest since 2001. So at least a healthy amount of money is supporting the development of new companies, rather than just sustaining the existing ones.

As you might expect given the overall declline, investment in most industries fell too. Health care, for example, shrank to EUR 164 million, a 55 percent drop from the same period last year. The energy sector seems to be doing well, however, with a record high of EUR 147 million invested in 10 deals, including an EUR 85 million investment in German photovoltaic company Sulfurcell Solartechnik.

German investments in general appear to be heating up, with a 29 percent increase since Q2 2007, making Germany the venture leader for the first time since 2001. Here’s a list of investments, by country, in millions of Euros.

[Art from Calvin and Hobbes by Bill Watterson]

Even though well-educated women and minorities have been entering the workforce for years, the venture capital industry is still dominated by white men. But there are a few signs that things are changing.

In a new study from the National Venture Capital Association and Dow Jones VentureWire, men outnumbered women three-to-one among the more than 500 venture capital professionals who responded. The imbalance is even worse among the VCs actually doing the investing — namely, those who identify as managing directors, managing partners, general partners, partners, venture partners and principals — where 86 percent of respondents were male, and 14 percent were female.

The survey found a similar imbalance in ethnicity. A whopping 88 percent of respondents were white, 8 percent were Asian Pacific, 2 percent were Hispanic and 1 percent was African American.

Of course, venture capital isn’t the only industry facing this problem; commentators have long bemoaned the dearth of women in tech companies, particularly at the top levels. (More than a year ago, Renkoo co-founder Joyce Park also wrote about the “hidden” gap in self-taught female software engineers.) And in the report, NVCA President Mark Heesen notes that there are signs that things are improving. For example, when you look at non-investing positions, the number of women goes up to 44 perent, and when you look at respondents with five years of experience or less, the number of whites drops to 82 percent. Those numbers aren’t great, but at least they’re better than the overall industry average, and they could foreshadow bigger shifts.

This is the NVCA’s first demographic survey, but it plans to conduct follow-ups on a regular basis, so when Heesen says, “The face of venture capital in 2020 will be much different than it is today,” we’ll be able to see if that’s true.

Some other results:

* Among professionals who have been in the industry for five years or less, 77 percent were male, 23 percent female.

* Women were most prevalent in biopharmaceuticals, where 32 percent of respondents were female, and least prevalent in the industrial/energy investment sector.

* 87 percent of respondents were born in the United States, while 5 percent were born in Asia and the Middle East, and 4 percent were born in Europe.

* 64 percent of respondents had masters degrees or Ph.D.s.

* The top universities among respondents were Harvard (12 percent), Stanford (9 percent), the University of Pennsylvania (8 percent), Duke University (5 percent) and MIT (5 percent).

Investment in Web 2.0 start-ups may be peaking, according to new data from Dow Jones VentureSource. Among other warning signs is the fact that Facebook accounted for a whopping 22 percent of the $1.32 billion in Web 2.0 investments made in 2007.

The number of investments in Web 2.0 companies (namely, websites that emphasize social tools like social networks and blogging) increased 25 percent in 2007, from 143 deals to 178, VentureSource says. That seems pretty healthy, but it’s nowhere near the growth rates from 2002 to 2006, when the number of investments doubled every year.

The numbers look especially weak for Silicon Valley. When you take Facebook out of the equation — the company’s $240 million investment from Microsoft (our coverage) and $60 million raised elsewhere add up to more than seven times the size of the next-largest deal — investments in the San Francisco Bay Area fell to around $421 million, a 3 percent drop from 2006. (See chart below.)

Of course, Facebook is the most high-profile Web 2.0 company around, so it seems a bit silly to discount its success. Still, those numbers are sobering, especially when you realize that growing economic problems, mostly related to the subprime crisis, are also contributing to slower investment (read more of our coverage here and here). For the foreseeable future, it looks like Web 2.0 companies — and start-ups in general — are going to have a tough time raising venture dollars.

See here for full report (partial screenshot below).

Here’s the latest action:

Murdoch appears to have enough Bancroft family support for purchase –The jury is still officially out, but the NYT is saying it looks like Dow Jones and its jewel, the Wall Street Journal, will indeed to go to Murdoch’s News Corp.

Hakia’s Scoop Bar — Hakia, one of the new search engines trying to take on Google by using “semantic” technology, has released a so-called Scoop Bar, which takes you more directly to the text you’re looking for in results. When you select a result at Google, you get taken the page and that’s all. Hakia’s feature automatically scrolls down to where the good stuff is and highlights it. (Via Pandia).

Hitachi’s new search — The company has developed a search technology that can find images similar to a specified image from millions of images and video data in one second.

Wikia buys Grub — Wikia, the company that wants to draw on user participation to create a search engine that rivals Google, has taken another step. It is buying Grub, an screensaver users can download and which exploits their idle computer CPU time to crawl the Web. Search Engine Watch has a good story on this, explaining how the Grub open source technology works. GigaOm has an informative post too.

Yahoo Search Assist — These are the days of new search engine features. Yahoo now has a feature called Search Assist, which seeks to detect when you are hesitating about what search term to use, and then offers up alternative queries. It goes beyond guessing what word you’re typing. It offers up terms that are also conceptually related to the search query you’re using. There’s a good review at SearchEngineLand.

Live Search’s new commands for search — Microsoft has unveiled new short commands for image search. If you’re looking for images of Jimmy Hendrix for example, you can add “filter:face” to select only images of Hendrix’ face. There’s also “filter:bw” for black and white images, and “filter:portrait.”

Google enterprise — This software lets companies and other groups view their global data and imagery. Companies are using it, Google says, for things like designing new buildings, exploring for energy and responding to emergencies.

Cisco may have acquired Click.TV? — Cisco may have acquired a video annotation and deep tagging service called Click.TV which shut down last month, according to Techcrunch. A Cisco spokesman responded: We do not comment on rumors.

Google is promoting its Checkout more aggressively on its site — Details here.

PG&E to buy electricity from one of the world’s largest solar plants — Enough to power 400,000 homes, the power comes from a deal with Solel Solar Systems of Israel, which is building a 553-megawatt plant in California’s Mojave desert.