Matt Harbaugh had it right all along.

Pittsburgh is one of the top five fastest-growing regions for investments by venture capital firms, according to a MoneyTree report being released today.

For the past few years Mr. Harbaugh has been saying Pittsburgh should not be judged in terms of venture capital by the total dollars spent but by the trend of that spending.

Mr. Harbaugh is the chief investment officer for Innovation Works, a venture capital fund that uses money from the state and local foundations.

The MoneyTree report, by PricewaterhouseCoopers and the National Venture Capital Association, used information from Thomson Financial to determine the five fastest growing regions for venture capital investment.

And where was Pittsburgh?

Second, right behind New Mexico.

The PricewaterhouseCoopers analysts disregarded any areas that had less than $100 million in venture capital investment for 2007. When they looked at the data they found that while the Silicon Valley area of California and New England receive more venture capital money, the five areas showing the greatest growth are New Mexico, the Pittsburgh Tristate area, Seattle, Los Angeles and the Washington, D.C., metropolitan area.

The report ranks New Mexico first because the number of companies that have received venture capital has grown by 650 percent, from three companies in 1997 to 21 last year. Pittsburgh had a 267 percent growth in the number of new companies receiving the money: 44, compared with 12 in 1997.

Pittsburgh bested all other cities with a 513 percent increase in new venture funding with nearly $200 million going to new companies, up from $32 million a decade ago. New Mexico, by comparison, had a total investment of venture capital in 2007 of $128 million, which was 375 percent higher than the investment there 10 years ago of $27 million.

"Venture capital is extremely organic. Once a critical mass of companies is funded in a certain region, a new eco-system will develop," Mark Heeson, the president of the national Venture Capital Association, said.

Richard Lunak, the president of Innovation Works, which funded 23 startups just last year in the Pittsburgh area, agreed.

He said the growth of startup companies has not been because of "any one silver bullet or one event. It's the maturing of our entrepreneurial community."

Mr. Lunak said the local universities were doing more research that is spurring more spinoff companies. And as more companies get started, there are more services available to help them along, such as attorneys who are conversant in the laws regarding product development.

Then, as the companies mature, the people who were in at the beginning turn to new technologies. "A lot of them begat other startups," he said.

Mr. Harbaugh said a sign that Pittsburgh is still growing startup companies is that the MoneyTree report notes that 66 percent of the companies are still in the "seed stage," meaning they are still in the process of developing the products they will bring to market.

Mr. Harbaugh said Innovation Works' portfolio of companies it has financed attracted about $200 million in follow-up financing.

Independent of the MoneyTree analysts, Mr. Harbaugh has run his own statistical comparisons of Pittsburgh. Using 2006 figures, he found that while Pittsburgh was 31st nationally for venture capital investment in 1997, it was 16th in 2006, but, when he looked at the dollars invested per capita for the Pittsburgh region, the area went from 36th in 1997 to 11th in 2006.

"It's not one company, it's not one deal," said Terri Glueck, the spokeswoman for Innovation Works. "When it's working it's feeding off itself and growing."