HUNTING BUCKS.

• Author: Traugot, Catherine Liden
• Position: High-tech venture capital - Statistical Data Included

It's still out there, but many high-tech hawkeyes are having trouble tracking down venture capital.

Late on a warm, sunny afternoon last September, a herd of high-tech upstarts gathered for an invitation-only dinner and a little offline networking at the Washington Duke Inn in Durham. During the cocktail hour, they angled to meet Jerry Borrell, editor of Upside, the San Francisco magazine hosting the event, and perhaps have a word or two with David Blivin, head of the Triangle venture-capital firm, Southeast Interactive Technology Funds, that had helped bring Borrell to the party. After years of being nothing more than an outpost for information-technology companies headquartered elsewhere, the Triangle was starting to get more than a passing glance from Silicon Valley.

As the guests were being seated at their tables, the lights went out. A car crash down the road had knocked out power. They weren't out long, but that's what Jud Bowman, the 20-year-old CEO of Pinpoint Networks Inc., a Durham-based wireless-search-engine company, remembers about the night. It turned out to be an omen of what would follow for information-technology companies across the nation. Those in attendance didn't know it yet, but the third quarter of 2000 would be the first of three straight declines in venture-capital investment nationwide.

Since that night, the lights have been going out more often at information-technology companies in North Carolina and across the nation. Many of the start-ups and venture-capital firms at the dinner have struggled. The companies -- some of the most highly touted of the Triangle last year -- have cut jobs, sacked management teams and watched promised venture investments slip through their hands. Southeast Interactive has at least six troubled companies in its portfolio. Bowman, though still able to keep the lights on at Pinpoint, isn't sure when it will be able to get another round of capital.

There are companies with plenty of money, but they're rare, says Vivek Wadhwa, informal mentor to several Triangle start-ups and founder of Relativity Technologies Inc., a Cary software maker. "Sales aren't closing, and companies are running low on cash, and the venture capitalists are running out of money to support them."

It's not that the money has stopped flowing to companies in the Triangle. It's just not gushing the way it was during the 15 months starting in April 1999. Nationally, first-quarter venture-capital-investment figures show a return to 1999 levels -- a 56% drop from the first quarter of 2000 but just 1% less than 1999. In the Triangle, the first-quarter falloff is steeper -- from about $300 million in 2000 to $90 million -- but 2001 still blows away the $20 million first quarter of 1999.

Venture capitalists like to think of late 1999 and 2000 as a blip -- a time when everyone got so excited by stock market acceptance of IPOs from money-losing startups that they lost their heads...