U.S. venture capital firms collected $1.7 billion for 33 new funds in the third quarter, a 76% plunge from a year earlier, according to a survey by an industry trade group.
Five funds accounted for almost two-thirds of the total collected, reflecting the tough times smaller funds are having attracting investors.
Venture funds that invest in start-up businesses have scaled back their ambitions as the technology sector has crashed and the long bear market on Wall Street has made it difficult for venture investors to cash out of their companies by taking them public.
"The venture capital industry is clearly in the process of returning itself to equilibrium," said Mark Heesen, president of the National Venture Capital Assn., which released the survey.
The third-quarter's fund-raising was 94% less than the quarterly peak of $30.8 billion recorded two years earlier. In the same period last year, venture firms raised $7 billion for 69 funds.