Venture Capital Catches a Smaller Wave

Sequoia Capital always was a bit of a maverick. The 30-year-old Silicon Valley venture-capital firm doesn't participate in most industry powwows. While rivals sought headlines, it has largely shunned publicity for its partners. And it never bulked up in size and scope the way other firms did during the bubble years. So it's fitting that Sequoia is dipping its toes in the water as the first of the veteran VCs to raise a new fund since the tech bust.

But the move may not be as gutsy as it looks. For one thing, with its current funds running low, Sequoia needed to raise cash. Sure, investors are cautious about handing over more dough to venture capitalists after being left with the battered remnants of hundreds of dot-com flops. Indeed, the money committed to venture capital is expected to total just $25 billion this year, down from a high of $99.8 billion in 2000. But that still would be one of the industry's best years ever and puts it back above its 1997 level--in other words, back to what was normal before the Internet boom knocked everything off-kilter.