Facing an uncertain economic environment, venture capitalists showed restraint with their wallets in the first quarter. These investors sank $6.8 billion into US companies across 603 deals in the period, according to data from Ernst & Young and VentureSource, a division of Dow Jones & Co., publisher of The Wall Street Journal. The deal total is the lowest since the first quarter of 2005, while the investment level is down 8% from the $7.4 billion recorded in the year-ago quarter and 9% in the fourth quarter of 2007. The health care sector showed particular weakness in the first quarter. Venture capital firms invested $1.74 billion in 142 health care companies, a drop of 43% and 19%, respectively, from the year-ago quarter. Since several health care firms have recently raised large funds, the drop-off may be temporary. For now, though, instead of the customary six weeks of diligence, some firms are scrutinizing deals in the sector for two or three months, said Brian G. Atwood, managing director of Versant Ventures. “We're seeing timelines extend out pretty significantly,” he said. On the flip side, companies in the area that VentureSource classifies as information services, which includes many companies dealing on the Internet--continued to receive strong interest from investors. Investment funding jumped to $1.59 billion in the first quarter of 2008, more than doubling the $776 million reported in the year
