Venture capital investment in Los Angeles was down sharply last year, but signs of life began to return to the sector in the fourth quarter, according to a pair of reports released Friday.

Nearly $200 million in venture capital was invested in L.A. startups in the fourth quarter, the highest total since the third quarter 2008, according to data compiled by Dow Jones VentureSource. The MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association found that $239 million was committed.

Nearly half of the capital invested – $96 million – went to information technology companies, the Dow Jones study found.

“Venture investors gave a much needed infusion of capital into the IT sector in the fourth quarter with software and networking leading the rebound,” said Jessica Canning, global research director for Dow Jones VentureSource, in a statement.

Still, just $622 million was invested in Los Angeles in 2009, down 47 percent from the previous year and the lowest annual total since 2004.

“It was a challenging time to raise capital and it was also a challenging time to deploy capital,” said Mike Schoenfeld, a partner in the venture capital advisory group for Ernst & Young LLP.

But he pointed out that there has been an increase in early stage financing, a promising change from early last year when venture firms were focusing more on keeping their portfolio companies afloat.

“VCs are willing and able to invest in the next innovative company,” said Schoenfeld. “Certainly there is a pent-up demand for capital.”

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