By Brendan Coffey
October 20, 2011

FORTUNE — Venture capitalists are still investing lots of money, according to third quarter data from the National Venture Capital Association, but there are signs they are getting a little more risk averse, cutting back steeply on seed deals and pursuing bigger investments.

For the third quarter, VCs invested $6.95 billion in 876 deals, down from $7.88 billion and 1,015 deals the previous quarter, according to the MoneyTree Report from the NVCA and PricewaterhouseCoopers. (Here’s a direct download of the report via the NVCA site).

Still, that level of VC investment made for the second-best quarter over the past three years, back to just before the financial crisis erupted in October 2008. The activity level is still pretty good, considering the wild August in the stock market and the fact VCs will only raise about $15 billion in new money for 2011.

But  average deal size of $7.9 million is the largest since the first quarter of 2007, when the typical deal came in at $8.5 million. Seed-stage funding dropped by more than half from $403 million to $179 million and early stage investments backtracked 7% from the spring quarter. Meanwhile expansion- and later-stage investments grew, with expansion stage investments hitting their highest level since mid-2008. First time deals also slipped to their lowest level since 2009.

While biotech and pharma deals are weakening due to tighter federal regulations and scrutiny of the sector, the biggest deal of the third quarter went to biotech firm Reata Pharamceuticals. The company, which is developing  anti-inflammatories taken orally, raised $300 million from one undisclosed firm. Maker of event management software Cvent raised $135.9 million from Greenspring, Insight Venture Partners and New Enterprise Associates. The only other $100 million-plus investment of the quarter was claimed by Airbnb, which offers travelers a global network of accommodations offered by locals. It raised $112 million from Andreessen Horowitz, Digital Sky, General Catalyst Partners and Greylock Partners.

As Michael Greeley, NVCA executive committee member and general partner at Flybridge Capital Partners notes in his take on the numbers, “Clearly VCs are increasingly drawn to businesses which can drive near-term revenue (consumer internet/social media) and/or don’t have open-ended product development pathways (life sciences/cleantech). External forces like the hostile FDA or non-existent IPO markets are conspiring against certain VC-backed companies.”

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