Venture capital funding during the second quarter continued at the healthy rate set during the first quarter, nearly matching the amount that was invested in that quarter and possibly putting 2007 on track to be a record year.

In total, $7.1 billion in 977 deals was invested during the second quarter, down slightly from the $7.4 billion invested during the first quarter. But unlike the first quarter when later-stage deals were most popular, the second quarter saw a 31% rise in investments in early-stage companies over the previous quarter, comprising 39% of all deal volume in the second quarter, according to the MoneyTree Report. PricewaterhouseCoopers and National Venture Capital Association compiled the report based on data from Thomson Financial.

VCs invested the most money in software companies -- $1.5 billion in 248 deals – since 2001, the report says. With this amount of investment software has regained its spot as the largest category of the 17 sectors the MoneyTree Report tracks.

Investments in telecommunications companies were down to $476 million from $622 million during the previous quarter, while networking companies saw increased interest as investments in that sector jumped to $371 million from $284 million the previous quarter.

Internet-specific companies, or those with a business model that fundamentally depends on the Internet, saw $897 million invested in 160 deals during the second quarter, down significantly from the $1.4 billion in 177 deals invested during the first quarter.

Officials with the companies that produce the MoneyTree Report say this decline in Internet-related investments “negates theories that a new `bubble’ is forming,” according to the press release.

Nonetheless, two of the top 10 deals of the quarter went to Internet-related companies: electronic stock trading services company BATS Trading received $45 million and Joost, which provides broadband Internet television services, saw the same amount.

Other big winners for the quarter included WiMAX equipment maker Telsima, formerly called Kinera, which received $50 million; Calix Networks, maker of access systems for broadband service, with $57.5 million; and Peregrine Semiconductor, which makes high-performance RF integrated circuits, with $51.9 million.