"The U.S. venture-capital industry posted 474 deals in the first quarter of 2005, raising a total of $4.6 billion -- a decline of 9 percent in deal flow and a fall of 16 percent in investment from the same quarter a year ago -- according to a quarterly venture capital report released by VentureOne and Ernst & Young LLP on Monday.

Early-stage investing, which has been on an upward trend since 2004, kept pace with that positive direction, particularly in the communications segment, the report says.

Activity in the first quarter has slowed down each year for the past five years given that it is a more administratively focused period for many venture-capital firms. In addition, a portion of firms may have directed their focus on fund raising in the first quarter as indicated by preliminary fund raising results this quarter, the report says. "