Venture Capital Drying Up Amid Financial Squeeze

SAN FRANCISCO – As it becomes increasingly difficult to cash out of their previous investments, venture capitalists are gradually closing their financial spigots in what could be the start of a long, dry spell for entrepreneurs.

Although a drought hasn't set in yet, it's looking inevitable as the ripple effects of a worldwide financial crisis rattle venture capitalists.

The trepidation was evident in the third quarter when the venture capital flowing to startups totaled $7.1 billion. That's a 9% decline from the same time last year, according to data being released Saturday by Thomson Reuters, PricewaterhouseCoopers and the National Venture Capital Association.

It marked the largest decrease since the spring of 2003, when the industry was still recovering from losses sustained in the dot-com bust.