The state of the venture capital markets has been followed closely the last few years in a search for good news. Sadly, the realization that venture capital fundraising is down again is not that. 

The Great Recession beat the venture capital market like a rented mule. There was a lot of heeing and hawing! The market took a beating as investors in funds either pulled their investments or refused to contribute to funds as they waited to see if the world was coming to an end like the rest of us. 

The Great Recession is now technically over even if it is hard to tell. What is not over is the sense of fear that the rich, middle class and poor have all been left with. At its core, venture capital is a risky business. The pay off can be huge, but the risk is certainly massive as well. Most investors find the potential return big enough to go for it, but that mentality seems to have changed now. 

To put it simply, the venture capital market keeps getting lopped off at the knees by investors. They simply are not coming back to the fold as the economy starts recovering. To give you a feel for this, consider that venture capital funds raised $40 billion in 2007. The news is now out for 2010 and the news is not good. The total funds raised were $10.6 billion, which is akin to a 75 percent drop. Yes, 75 percent. 

Most people couldn’t care less that happens to VC. That is understandable in these tough times. Still, it is critical to realize that this funding is critical to many businesses trying to grow. Growing businesses are critical to an economy that is desperately in need of positive news, job growth and GDP growth. 

Will venture capital fundraising ever go back up again? Absolutely, but it is difficult to know when and how long it will be before we hit the $40 billion level again. That is very unfortunate for businesses looking for seed funding at this time.