Venture Capital Could Shrivel Away

The only way to break some habits is to hit rock bottom.

Such might be the solution for venture-capital firms, which make equity investments in early-stage growth companies. The industry rode high up to and during the dot-com boom but has suffered a vicious cycle of losses since the bubble burst. U.S. venture-capital funds raised each year from 1999 to 2007 have posted median annualized returns ranging from a 0.3% gain to a 7.7% loss, says research firm Preqin.

Not surprisingly, fund raising has now come to a near halt. Thomson Reuters estimates U.S. venture-capital funds raised just $1.9 billion in the second quarter. By comparison, in the same period of 2000, the peak year, funds raised $33 billion. In 2009, just 170 funds raised new money, compared with 749 in 2000.

To read the full, original article click on this link: HEARD ON THE STREET: Venture Capital Could Shrivel Away - WSJ.com

Author: JOHN JANNARONE