Funding by venture capitalists rising in America’s Middle

Venture-capital funding, though lagging the West and East coasts, has been rising sharply in the Midwest and could be poised for bigger growth in the coming years.

In the first half of 2006, venture-capital investment in the Midwest totaled $540 million, a 68 percent increase over the year before, according to data compiled jointly by Ernst & Young LLP and VentureOne.

Illinois attracted the lion’s share of the region’s venture-capital investment in the first half, with $242 million.

Though investment in the Midwest is small compared with other parts of the country — California’s Silicon Valley received $2.2 billion in VC funding in the second quarter alone and New England $708 million, according to data from PricewaterhouseCoopers — certain sectors in the Midwest, such as alternative energy, have the potential to help the region close the gap, venture capitalists say.

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