Venture Capitalists Still Waiting; Financing Way Off Its Peak; Two surveys show decline in number of deals done, as well as value of deals.(INTERNET & TECHNOLOGY)

Byline: BRIAN DEAGON

The past few days have been a time of reflection for the venture capital industry as the two largest VC associations posted their latest quarterly numbers on industry performance.

Both show that the decline in deals done and money invested is continuing into its third year. The drop started in the first quarter of 2000. The reports show the industry is back where it was in 1997, in terms of deals done and money invested -- and that may not be such a bad thing.

"Less money is being thrown out the window," said Don Williams, a venture capital adviser at Ernst & Young. "We're not seeing the frenzy that took place in 2000, where a lot of companies that should not have received funding instead got tens of millions of dollars."

The Ernst & Young/VentureOne Venture Capital Survey showed 404 financing deals done in the first quarter, down 27% from the same quarter a year ago and way down from the peak of 1,784 deals in the first quarter of 2000.

VC firms invested $3.4 billion in the quarter, off 40% from last year and also down from the $27 billion peak three years ago.

The National Venture Capital Association this week held its annual meeting, during which a panel of industry experts discussed the current investment environment. Panelists left an impression that the industry is feeling its way through the dark -- not panicking, but not quite sure the worst is over.