Venture investing fell fifty percent in the first three months of the year compared to the same period last year, said VentureSource. Venture capitalists invested about $3.9 billion in the period, down 20 percent from the depressed level of the last quarter of 2008.

"We are definitely comparing this situation to the dotcom crash now," said Jessica Canning, director of research at VentureSource. "Investors are waiting for some kind of signal the economy will rebound and a sign it's time to get back in investing."

Last fall, one startup executive called the current environment a VC winter. In this climate, VCs are focused on keeping their current slate of startups going, taking on fewer new investment.

"Historically investors have a balanced strategy with existing and new companies, but that has changed significantly," Canning said. "They are not making as many new investments and focusing on sustaining their existing portfolios," she added.

Canning advised startups looking to attract first-time investors to sell the value of their management teams, one of the primary factors new investors assess. She also said startups need to be realistic about who are their competitors and provide specific strategies for how they will go up against them.

New startups will also have to be lean. The median deal size in the latest quarter declined to $2.38 million its lowest level since 2002. "It had been increasing up to almost $8 million for awhile, so it's surprising to see companies getting less financing each time," she said.

The information technology sector was the hardest hit in the current quarter. Investments fell 52 percent to $1.68 billion, its lowest level since 1997 and its lowest number of deals since 1995. The median deal size is also eroding in the IT sector, down to $5 million in the last quarter.

"It's been slowly creeping down from $6.2 million over the last couple years," Canning said. "The sector won't grow at the same pace it used to, but I don't see it declining to become less significant overall," she added.

The renewable energy sector also took a hit in the last quarter, with investments down a whopping 73 percent to $117 million. However, Canning said the drop likely was a one-time event due to an aberration in a still-small market.

"There aren't that many deals going into clean tech, but I don't think this will be a sustained trend," she said. "There is not a large pool of companies to invest in because they still are creating an industry from scratch, but it could leapfrog the IT sector someday," she added.

The quarter was not without its share of a few big deals, led by a $100 million investment in Open Range Communications, a WiMax service provider aiming at rural markets in the U.S. whose investors included the U.S. Department of Agriculture. The second biggest deal was a $69 million investment in A123 Systems, a maker of lithium ion batteries for cars.

Other top ten deals where primarily for drug companies.

"The top deals usually do come in that [$100 million] range," said Canning. "We have seen a couple hundred million go into companies where you need to create infrastructure or factories and therefore have big capex spending," she said.