After more than a year of contraction, the venture capital market began to pick up again in the fourth quarter, according to a new report. Venture capitalists invested $7.1 billion in the fourth quarter of last year, up from $7 billion in the third, said the report, issued by PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association. That quarter-over-quarter increase reverses a downward trend that began in the third quarter of 2000. Meanwhile, despite the tough economic environment, last year was the industry's third best in terms of total dollars invested, with $36.5 billion. "The uptick in dollars and deals in the fourth quarter occurred despite economic disruption and uncertainty. And, calendar year 2001 investments were nearly double 1998, which was the last pre-bubble year," wrote Tracy Lefteroff, global managing partner of the venture capital practice of PricewaterhouseCoopers, in the report. Biotech, medical devices and equipment and health care enterprises won a greater percentage of overall investment than in recent years during the fourth quarter, with 18.5% of total investment. In the fourth quarter of 2000, that sector received only 7.97% of investment, according to the report. On an annual basis, biotechnology saw the largest increase in percentage of investment, while retailing and distribution saw the biggest decrease. The latter was attributed to the decline of e-commerce. The report said investment in later-stage financings and expansions took a larger piece of the overall investment pie for 2001, while early stage investments as a portion of the total declined. "During much of the past 18 months, venture capitalists have spent the majority of their time working closely with their existing portfolio companies, leaving less time to make investments in new companies," said Mark Heesen, president of the National Venture Capital Association.