The $260 billion venture capital industry did not contract much after the tech-stock bust

Silicon Valley is the center of an industry that research provider VentureOne says raised 24 funds of $1 billion or more in the boom years of 1999 to 2001. Some large VC funds haven't parlayed recent investments into lots of big hits and may face the music and wind down operations, reports WSJ.

Mobius Venture Capital cut a planned $1.5 billion venture fund to $1.25 billion, a scenario some expect to be repeated across Silicon Valley.

The $260 billion venture industry didn't contract much after the tech-stock bust, and many academics and investors say it should get smaller -- though the global glut of cash among big institutional investors probably will keep many venture funds afloat for a while. 

In the first quarter 2006 U.S. venture capital investing reached its highest point in 4 1/2 years with $6.73 billion directed to 619 deals, according to the Quarterly Venture Capital Report released by Ernst & Young LLP and VentureOne.

Private equity fundraising also continued to break new records in both the venture capital and buyout asset classes in the second quarter of 2006, according to Thomson Financial and the National Venture Capital Association (NVCA). In the quarter, fifty venture capital funds raised a total of $11.2 billion, the highest level since the first quarter of 2001. Thirty-five Buyout and Mezzanine funds raised $30.8 billion.

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