An eerie silence pervades the technology-focused venture capital community.

In an about-face from the gold rush mentality of a year ago when investors stood willingly in the limelight and chatted up their portfolios, L.A.'s venture capital business has gone behind closed doors.

Preoccupied with their fledgling companies, VCs are in nurturing mode lining up additional financing for existing investments from their own fund or from another one.

Still, if you ask just about any local venture capitalist how things are going, they will tell you they're busy looking at potential early stage investments and even doing deals. They just don't want to talk about any of them.

The aloofness is easy to explain. The door for initial public offerings is still shut and valuations of private technology companies have plummeted, making it difficult for venture capitalists to cash in on their investments.

"Let's face it, those firms that made investments in 1999 and 2000 have issues on their hands," said Pat Haden, partner with private equity firm Riordan Lewis & Haden. "Many of those firms in the Internet space are figuring out what they can do, whether it's merge and sell, abandon ship or continue evaluating their alternatives. It makes it difficult for the VCs to look at new deals."

Venture capital funds in the United States posted back-to-back quarterly losses in their portfolios for the first time since the 1970s, according to the National Venture Capital Association and Venture Economics.

The most recent figures available for Los Angeles funds are for year-end 2000, but if national numbers are any indication, VCs are on track to have their worst year on record. The 1,200 funds monitored by Venture Economics posted an average loss of 8.9 percent in the first quarter of 2001, which follows a 13.4 percent decline in the fourth quarter of 2000.

A brave face

Even so, there are few venture capitalists who admit to having "issues."

Enter reticence and denial.

"Everyone has their dirty little secrets that they don't want to talk about, such as admitting that they're not investing new money," said Paul Nadel, managing partner of East West Venture Group. "It's hard to have a lot of bravado in these markets. There's an insecurity with telling what's really happening."

Nadel said East West has done "a couple of deals in the last four months," but declined to comment further. Riordan Lewis & Haden has invested $24 million in the last four months across several L.A. deals. Redpoint has done no deals in L.A. so far this year, and Mellon Ventures has done two deals recently.

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