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GeekWire readers have been engaged in an active debate over the past few days on the ailments facing the Seattle startup community. Some have argued, including guest columnist Marcelo Calbucci, that it is a money/support problem while others, including guest columnist Jonathan Shapiro, have pointed directly to the lack of investment-worthy startup ideas being incubated here.

Whatever the problem is, the latest numbers from the MoneyTree report from PricewaterhouseCoopers, the National Venture Capital Association and Thomson Reuters, starkly showcase the dilemma. Washington state’s share of the venture capital investment pie shrunk during the second quarter as $122 million was invested here.

That’s down 21 percent over the same period last year.

Top 20 states for VC investment in the U.S.

But what’s even worse is that other states are gaining momentum, something I pointed out in my story last week: “Are VCs sleeping in Seattle?”

Consider this: During the second quarter of last year, Washington ranked fifth in terms of venture capital dollars when compared to other states. Now, according to the latest report, the state is ranked 10th.

Stating the obvious here, but that’s not a positive trend.

Over the years of covering the venture capital beat, Washington has pretty consistently ranked fifth or sixth in terms of dollars invested, sometimes moving up, sometimes falling down. But falling to 10th — behind states like Virginia, Colorado and Illinois — is a big drop.

Now, there are certainly a lot of caveats here to consider. And slippage during a single quarter is not the end of the world.

For one, Arizona rose up the charts with a whopping $152 million in venture capital investments. But, it is certainly worth pointing out, that the money was spread across just five deals.

Washington state ranked sixth with 27 deals, meaning money is flowing here just in smaller chunks. There are also some good things percolating in the venture capital market, with at least one very large deal set to close this month. (More on that soon).

Nonetheless, it does appear as if the state is backpedaling a bit. In my years of covering the venture capital beat around Seattle, I don’t recall a ranking this low. (I’ve reached out to the NVCA to get more clarification).

As startup veteran Janis Machala pointed out in the comments of a recent GeekWire post, Washington state just doesn’t have a large base of venture capital firms.

It has been that way for years, and still money has flowed. What has changed is that some of the out-of-state firms — including Polaris Venture Partners and Arch Venture Partners — have become less active in the region. (Polaris, as a matter of fact, closed its Seattle office earlier this year with one of the partners of the firm telling VentureWire that the market never really developed as they anticipated).

Another factor is that some of the larger Seattle firms, including Ignition Partners and OVP Venture Partners, are spending more of their time doing deals outside of the region.

Meanwhile, a state such as New York — which during much of the past decade ran just ahead of Washington in terms of VC dollars — are pulling away. According to the MoneyTree report, New York companies pulled in $1.3 billion last year. That’s more than double the $624 million that flowed into Washington state.

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