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Technology investment across Europe was down 35% in 2001 to €7.4bn (£4.8bn), but the UK managed to attract 26% of available investment and venture capital funds.
Computer software businesses led the table attracting 32% of technology investment, followed by communications carriers on 21%, according to PWC's Money for Growth 2001 survey.
"The majority of the software investment went into second-stage funding for the expansion of established businesses, rather than into early stage start ups," said Terry Hopcroft, European software leader at PWC.
This reflects a shift away from the "'get rich quick' investment approach that characterised the dotcom gold rush" towards innovative software applications "that make the Internet a better place to do business and that can demonstrably strip cost out of business processes", he added.
E-business investment was hit hard last year with just under 1,000 e-commerce investments totalling €1bn (£646m). This compared to 2,000 investments worth €2.4bn (£1.55bn) in 2000.
"Despite the overall decline in technology investments in 2001, there is no shortage of funds for investment in Europe and excellent opportunities remain open to companies seeking venture capital with convincing business proposals," said Keith Arundale, European venture capital sector leader at PWC.
More than 1,400 venture capitalist firms across 21 countries were polled for the 2001 report.