"Entrepreneurs are seeing lots of their traditional avenues of finance getting whittled away," says Mark Heesen, president of the National Venture Capital Association. He adds that he has a "high level of concern" for the overall health of the venture industry. The pullback comes as venture capitalists have been hurt by a gyrating stock market, which has put a crimp in the market for initial public offerings, which the industry depends on to generate returns. Merger-and-acquisition activity -- another route to returns -- has also tanked. And many venture capitalists are also facing difficulty raising funds as their investors grapple with hard-hit portfolios.