For the first time since 1998, venture capitalists are seeing red. That's because returns on limited-partner investments in venture capital funds slid into negative territory for the last quarter of 2000, showing a 6.3% loss, according to a recent report from Venture Economics. While the yearlong performance—a 37.6% annualized return—was still far superior to public-market barometers, the plunge indicates the pinch felt by the rest of the communications industry is squeezing VCs. As a result, VCs are investing at a more measured pace, releasing cash for only select new deals and determining which companies deserve more private equity and which should be mothballed to minimize losses.
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