It's a much more ornery environment out there--and minority start-ups had trouble finding veins of capital during flush times. And, to make matters worse, venture firms have been forced to dig harder for money, too. That message was loudly echoed throughout Southern California's lush Ojai Valley Inn and Spa where more than 170 venture capitalists and investment bankers gathered at the recent conference of the National Association of Investment Companies (NAIC), the trade association for investment companies that invest in minority business'. Maintains Terry Jones, a general partner of $225 million Syndicated Communications Venture Partners (SYNCOM) in Silver Spring, Maryland: "It's been some time since the venture capital industry has been in a down cycle, and it is going to have to retool. It will be interesting to see how entrepreneurs deal with the reality that their goals may not automatically be achievable within a short period of time."n the post-internet era, venture capital firms have been pumping fewer dollars into start-ups. According to Newark, New Jersey, research firm Venture Economics, a subsidiary of Thomson Financial Corp., VCs put a mere $34.9 billion into business' for the first three quarters of 2001, compared to a whopping $82.6 billion a year earlier. Financiers should no longer expect the lofty triple-digit returns produced by their investments just a few years ago. Now, the returns will be more down to earth.

The new reality is that entrepreneurs and venture firms will not find nuggets of opportunities lying on the topsoil. More often than not, they're going to have to mine capital with their version of pick-axes. However, Laurence Toney, entrepreneur in residence for Opportunity Capital Partners (OCP), an African American-owned private equity firm in Fremont, California, believes business owners shouldn't shy away from the challenge. "It's a great time to be an entrepreneur," says Toney, who scouts new deals for himself and OCP. "You can acquire talent at a reasonable cost, grow your company with more realistic expectations, and prepare for the rebound."