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Capital Shakeout

Institutional investors put the squeeze on VCs. What does it mean for you?

This story appears in the January 2001 issue of Entrepreneur. Subscribe »

If you believe the warning knells of those bearish on the venture , that loud sucking noise you've been hearing is the sound of a deep pool of large institutional investor cash being drained dry.

An exaggeration, perhaps, but not entirely off the mark. While second quarter 2000 saw continuing record levels of VC , third-quarter numbers showed signs of leveling off, with VCs complaining that institutional investors have grown stingier. A survey from the (NVCA) reports some VCs saying they've been investing in early-stage companies less aggressively since last April's sell-off that ravaged the tech sector.

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