The past two years have been brutal for emerging technology companies seeking venture capital investments. But that’s changing. Following a burst of initial public offerings late last year, venture capitalists are already loosening up their purse strings for the next batch of startups.

In the fourth quarter of 2003, venture capital firms raised $5.2 billion, almost half of what they raised in all of 2003. During the same period in 2002, they raised just $2.1 billion. And there are some clear indications about where venture investors are looking to spend their money. “There still seems to be a tremendous amount of interest in the wireless sector, in enterprise security applications and consumer electronics products,” says Kenneth Lawler, a general partner at Battery Ventures in San Mateo, CA.

The renewed interest in venture capital is partially fueled by signs that opportunities for lucrative public offerings are returning. Although just 29 venture-backed companies went public in all of 2003-a paltry number by historical standards-17 of those were in the fourth quarter and raised $1.05 billion, an average of $61.7 million per offering. The largest contribution to these fourth-quarter IPOs came from the medical and health-care sector, with five companies, followed by consumer products and services with three. Still, experts are cautious. “The [initial public offering] market is still very challenging. It’s not as if any kind of floodgate has opened here,” says John Gabbert, vice president of research at VentureOne, a San Francisco-based venture research firm.

Whether the momentum in the venture market will hold up is anyone’s guess. But at least some rays of hope are penetrating the gloom.