Springing Back It's not a mirage. The end to the long VC investment dry spell is within your reach.

After 18 months of steadily declining venture capitalinvestment--and ever-gloomier forecasts for the foreseeablefuture--entrepreneurs may finally have a good reason to hope forbetter times. For the first time since mid-2000, VC investment rosemodestly in the fourth quarter of 2001 to $7.1 billion, accordingto the PricewaterhouseCoopers (PwC) "MoneyTree Survey,"in partnership with VentureOne and the National Venture CapitalAssociation (NVCA).

Overall, VC investing for 2001 was still drastically behind theprevious year's capital free-for-all-down from $99.6 billion to$36.5 billion. But Kirk Walden, national director of venturecapital research for PwC, says 1999 and 2000 were anomalies in VChistory, representing investment levels historically unprecedentedand completely unsustainable. He points out that in 1998, justbefore the dotcom balloon swelled to full size, VC investing hadreached $19.2 billion. "If you take the Internet bubble out,you almost double the historical precedent," says Walden."That's a healthy level of investment."

Still, VCs are just coming off a long period of hunkering downwith existing portfolio companies during a time when liquidityoptions have been quite scarce. In Q4 2001, investment inearly-stage companies remained below 20 percent-a number thattypically stayed in the 30 to 35 percent range, says JeanneMetzger, NVCA's vice president of business development. In aseparate survey of 400 VC firms conducted by Fountain Hills,Arizona-based Profit Dynamics in October 2001, 55 percent ofventure capitalists believed the level of investing in early-stagecompanies would decrease over the following 12 months because ofthe demands of existing portfolio companies and the poor economicconditions.