04/18/2012 06:27 pm ET Updated Apr 18, 2012

Did A Startup Bubble Just Pop?

Venture capital financing fell 21 percent in the first quarter of 2012 to its lowest level in nearly two years, according to a new report.

That's after 2011 marked a 10-year high for venture capital.

Hear that? Has a bubble popped in 2012?

Not quite, says CB Insights, the research firm that released the data Wednesday. Venture capitalists are actually doing more deals -- they're just cutting smaller checks.

In fact, VCs invested in 785 deals in the first quarter of 2012, the second-highest quarterly deal count in over two years.

The dip in dollars, the report found, "is primarily the result of fewer VC mega deals in the quarter." In 2011, for example, daily deals site Living Social raised $400 million and data storage company DropBox nabbed $250 million. Similarly, 2010 saw Groupon pick up $950 million and Twitter raise $200.

But 2012 is thus far shaping up to be a year in which smaller bets on younger companies make up a larger share of total venture investments. CB Insights found that bets on brand new or "seed-stage" companies accounted for 19 percent of all first-quarter deals, which is an all-time high.

These small, early investments allow venture investors to minimize risk, the report said, while also getting "first access to invest in these companies should they show signs of going from seed to something more substantial."