The Thrill of the Chase
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Where can a serious entrepreneur find venture backing in 2003?Go back to the future. That's where the venture capitalindustry is headed. According to the "MoneyTree Survey"from PricewaterhouseCoopers, Thomson Venture Economics and theNational Venture Capital Association, total venture capitalinvesting in 2002 fell to $21.2 billion, its lowest level in fiveyears. A special analysis prepared exclusively for Entrepreneurshows that out of a total of 3,000 firms attracting venturecapital, only 530 start-up and early-stage companies got theirfirst round of funding in 2002--the fewest since 1994.
The trends may seem discouraging, but they represent a return tohistorical norms after a spike of unsustainable proportions. BillElmore, general partner of Foundation Capital, a Silicon Valleyfund with $200 million under management, puts it this way:"Too many companies were funded over the last three or fouryears, and the failure rate jumped. Today, the hurdle to make a newinvestment is way up. But don't mistake patience forpessimism."
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