Venture capitalists are once again getting more interested in early-stage companies, a new study suggests. "We were quite surprised by the number of funds doing seed or start-up deals," reports Richard Meyer of Emory Business School and Orion Technical Associates, in Atlanta. For the past eight years Meyer and his colleagues have been tracking the characteristics and performance of venture-capital funds that cater to new enterprises. He estimates that approximately 170 funds specialize in seed and start-up deals -- nearly double the number that did in 1991. His most recent study, "The 1993 National Census of Seed Capital Funds," is drawn from the responses of 67 of those funds.

One big finding: not all seed funds are alike. In addition to private-sector investors, there are also public funds (backed by government agencies) and combination funds (formed by a partnership of public and private money). The three groups have very different investment criteria, Meyer found. Sixty-three percent of his survey respondents were private funds, and they were overwhelmingly (and not surprisingly) motivated by return on investment (ROI). By contrast, the 12% of respondents that classified themselves as public did not even mention ROI, citing instead factors like job generation and economic development.

Predictably, the public funds posted an average ROI far lower than that of their private counterparts, 6% versus 18.8%. But here's the surprising part: combination funds, motivated by both ROI and job creation, cited the highest ROI -- 23% on average -- and the lowest investment-failure rate (12% versus 15% for private funds and 20% for public funds), making them the best performer among the three categories of funds, says Meyer.

-- Alessandra Bianchi