WSJ.com - Silicon Valley's Backers Grapple With Era of Diminished Returns

"After decades of powering -- and profiting from -- the technology sector's growth, Silicon Valley's venture capitalists are grappling with an era of diminished returns.
The industry that grew rich supplying early funding to tech giants like Microsoft Corp. and Apple Computer Inc. is being weighed down by a skittish stock market, a glut of investment capital and slowing growth in the tech areas that have been most lucrative for backers.
Venture capitalists typically invest in young companies, such as tech start-ups. Many of their investments turn out to be losers, but they hope for big paydays when a company they back is sold or goes public."