Stock market investors may be fretting about the future of Internet companies, but venture capitalists in the first quarter didn't stop pumping cash into those types of start-ups.

PricewaterhouseCoopers

' Money Tree Survey of VC funding of U.S. firms released today found that Internet companies accounted for a record 62% of all VC investments in the first quarter, up from 45% in the first quarter of 1999. VCs invested $10.76 billion in Internet companies in the first quarter, compared with $1.95 billion in the first quarter of last year.

"The Internet is still booming. I think were going to see continued growth, in pure dollars,

and deal size will continue to go up," said Tracy Lefteroff, global managing partner of private equity and venture capital at PricewaterhouseCoopers. The survey pegged total VC investing at $17.2 billion in the first quarter, compared with $4.33 billion a year ago. Average funding per company was $12.01 million in the first quarter, vs. $5.89 million a year earlier.

Even B2B e-commerce start-ups saw a healthy first quarter. But investing in the sector, which has been hard-hit in the stock market recently, may have peaked. B2B companies received $1.88 billion in VC investments in the first quarter, up 19% from the $1.59 billion received in the last quarter of 1999. Despite the increase, B2B start-ups received a smaller piece of the total pie last quarter, getting 17% of VC investments in Internet companies, compared with 18% in the fourth quarter.

In the first quarter, Internet services, such as order fulfillment, and Internet applications, including security and traffic management, took home the most VC money among Internet-related companies.

VC funding for Internet-related applications companies was up 74%, to $2.1 billion in Q1 from $1.2 billion in Q4. Internet-services companies grabbed the largest share of total Internet investments. The $2.3 billion they received in the first quarter was up 53% from the prior quarter and represented 22% of total Internet investments.

Lefteroff predicted VC funding for Internet infrastructure concerns will continue to grow, driven by moves to close geographic gaps in Internet penetration and the global economy's continuing move onto the Internet.

Infrastructure start-ups accounted for 16% of total Internet investments, at $1.69 billion, in the first quarter. That's only 16% more than the $1.46 billion the industry got in the fourth quarter but almost double the $848 million invested in the third quarter of 1999.

Another hot spot for VC funding, according to Lefteroff, will be telecommunications, as the fiber-optics and telecom area remains hot.

Telecommunications companies received more than $3 billion in VC funding in the last quarter, up more than fivefold from the first quarter in 1999.