Venture capital investment in the US has collapsed to its lowest level since before the dotcom boom a decade ago as the effects of the recession and deeper seated problems in the venture industry start to bite, according to figures to be released on Saturday.

The gradual drying-up of start-up financing, noticeable last year, accelerated sharply in the first three months of this year and is likely to stir renewed warnings in the venture world about the potential longer-term damage to the US economy.