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The Thrill of the Chase

Nowadays, it seems venture capitalists are an endangered species, but your chances of finding VC funding are better than you think. We'll help you track down investors with our 3rd Annual VC 100.

This story appears in the July 2003 issue of Entrepreneur. Subscribe »

Where can a serious entrepreneur find venture backing in 2003? Go back to the future. That's where the venture capital industry is headed. According to the "MoneyTree Survey" from PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association, total venture capital investing in 2002 fell to $21.2 billion, its lowest level in five years. A special analysis prepared exclusively for Entrepreneur shows that out of a total of 3,000 firms attracting venture capital, only 530 start-up and early-stage companies got their first round of funding in 2002--the fewest since 1994.

The trends may seem discouraging, but they represent a return to historical norms after a spike of unsustainable proportions. Bill Elmore, general partner of Foundation Capital, a Silicon Valley fund with $200 million under management, puts it this way: "Too many companies were funded over the last three or four years, and the failure rate jumped. Today, the hurdle to make a new investment is way up. But don't mistake patience for pessimism."

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