A decade ago, FreeMarkets, Vocollect and WiseWire -- the young firm that would eventually be melded into search firm Lycos -- weren't much different from the 22 startups angling for investors' attention at today's Pittsburgh Angel Venture Fair.

Back then, they were among a string of Pittsburgh startups that, picking up a few million each, raised a total of $33 million in venture capital -- a mere dollop compared with cities such as Phoenix and Portland, Ore., where young firms, in total, raised four times as much money.

	Stacy Innerst, Post-Gazette Click illustration for larger image.

Ten years later, a new crop of firms following in the trio's footsteps landed a total of $229 million last year -- a leap making Pittsburgh one of the fastest-growing in the country for reeling in venture capital dollars in 2006. Such activity bodes well for the bevy of new startups gathering today to make their pitches at Downtown's Renaissance Hotel, event organizers say.

Tech boosters view the newfound ability of local startups to raise funds as one of several signs that Pittsburgh's efforts to trade in its old steely image for a new one that ranks it among the nation's innovative tech hot spots are starting to pay off.

"Venture capital is just one of the pieces that has matured in the past decade," said Richard Lunak, chief executive officer of Innovation Works, the state-supported Hazelwood-based technology economic development group that helps startups and young firms get off the ground.

He also cited a larger, well-worn pool of industry veterans that includes attorneys, accountants and managers with the know-how to guide young firms.

And he pointed to figures compiled by Innovation Works showing that, by one measure, Pittsburgh ranks with the likes of such well-known tech hubs as Silicon Valley, Boston and Austin, Texas, in its ability to raise funds for promising tech startups.

But like so many cases with statistics, the numbers don't tell the full story.

		Graphic: "Angels" over the years

The ranking, for example, includes $100 million in venture money raised last year by a seemingly old economy Aspinwall-based coal company, Targe Energy. Take away that sum, and Pittsburgh's status among the tech world's bigwigs slides a bit, Mr. Lunak acknowledged.

It's also worth noting that the measure was a per-capita figure, aimed at adjusting the amount of venture capital raised in proportion to the region's population. That's not an unheard of adjustment, but it does portray the region in a more positive light; more straightforward measures that don't adjust venture dollars for population show the region doing pretty well, just not as well as the per-capita figure shows.

Still, however it's measured, last year's spike in venture funding was a big jump from the $76 million raised in 2005, the lowest level since 1997, but still well off the record $886 million raised in 2000 at the height of dot.com fever.

A lot has changed since then. The popping of the dot.com bubble caused once free-spending venture capitalists to retreat, making it harder for Pittsburgh early startups to find money. But the rough times and tough lessons of recent years also have polished Pittsburgh's once-naive tech sector, producing a crop of more sophisticated and seasoned investors as well as tech executives, industry insiders say.

"We have a much more developed tech sector than we used to," said dot.com survivor and Reed Smith law firm partner Peter Blasier. Cohen & Grigsby attorney David Kalson, a 12-year veteran of the local tech scene who leads the law firm's emerging business unit, agreed.

Today' startups have been able to flourish without venture capital by being self-funded and relying on private "angel" investors to push them along, Mr. Kalson said. These so-called angel investors tend to come in early and generally don't seek the sort of returns and exit strategy that venture capitalists do.

Also helping things along has been the greater visibility and credibility of local research institutions, led by Carnegie Mellon University and the University of Pittsburgh, tech veterans say. Both institutions have helped boost efforts to unleash technology bred within their walls into the marketplace. Moreover, many of the local go-to spots for entrepreneurs -- the Pittsburgh Life Sciences Greenhouse, Idea Foundry and the Technology Collaborative -- didn't exist 10 years ago.

All of these efforts have helped put Pittsburgh on the national map, said Matt Harbaugh, Innovation Works chief investment officer. He noted prospective out-of-town investors that he courts now appear well-versed in Pittsburgh's technology strengths.

"It's nice not to have to supply out-of-town investors with Pittsburgh 101," said Mr. Harbaugh. "Now a lot of them are contacting us, which is nice, because they've heard what good things are happening here."

That heightened visibility is reflected in the numbers. Some $8 of every $10 of venture funds raised locally in 2006 flowed from locales as far away as Denver and Silicon Valley, Calif.

Yet despite the progress and heightened visibility, Mr. Blasier and other veterans of the Pittsburgh's technology scene say finding money for early startups is an ongoing battle.

"I don't know that we're ever going to have plentiful dollars and angels here," Mr. Blasier said. "I know it's a continuing challenge for companies."