Venture capital investment in network companies hit another low during the first quarter, with the total number of investments dropping to its lowest point since the third quarter of 2004.

Network companies, including hardware, telecom and Internet-related vendors, secured 374 investment rounds worth a total of $2.66 billion in the most recent quarter, according to data provided to Network World by PricewaterhouseCoopers, author of the quarterly MoneyTree Report.

That's the smallest number of deals since the 352 recorded in the third quarter of 2004, and the smallest dollar value since the $2.54 billion secured by network companies in the fourth quarter of 2006. Network companies are a long way from the glory days of 2000, when investments reached a high of $67 billion. The annual average has been about $11.5 billion over the past four years.

"The sector is continuing to struggle a little bit. It never quite recovered from the 2000 downturn in networking and communications equipment," says Tracy Lefteroff, global managing partner of the venture capital practice at Pricewaterhouse Coopers.

On the plus side, Internet companies might be on the cusp of a new wave of investments, because growing volumes of videos and other types of Web traffic may necessitate heavy spending to expand the capacity of the Internet's infrastructure, Lefteroff says. "We could be seeing out on the horizon a need for Internet service providers and people providing services to expand the capacity of their networks,"  he says. (Compare network infrastructure products.)

For all industries, United States venture capitalists invested $7.1 billion in 922 deals in the first quarter of 2008. That total is down 8.5% from the fourth quarter of last year, but was still the fifth-highest quarterly total since 2001.

Let's take a look at the top ten networking investments from the first quarter of 2008, along with some other notable deals. The most lucrative networking deal went to an Internet software company in Winter Park, Fla., which secured $55 million in venture money. But the name of the company was not disclosed. The following list details only those companies whose names were made public.

1. Slide (San Francisco)  
New money: $50 million
Investors: Fidelity Investments, T. Rowe Price Threshold Partnerships.
Description: Internet software company, developers technology for slideshows and other digital content.