Right around the time venture capital investing was hitting unprecedented levels in the second quarter of 2000, two fund companies were busy rolling out venture capital divisions dedicated to investing in young, Internet and technology-related companies. But like most who got into venture capital investing at its peak, those companies are struggling with or cutting back on their investments, according to industry executives.

Both American Century and Zurich Scudder launched venture capital divisions last year as a way to invest in young, Web and technology companies, which could potentially benefit their businesses from an investment and operational standpoint.

Zurich Scudder's efforts at developing a venture capital arm, E-cubator, were scrapped this past February after its November launch. The division was later renamed iScudder before it was dismantled and its investments absorbed by Zurich Global Assets, said Shannon Bell, a company spokeswoman. "We decided to focus on our core investment activities," she said.

That development is not surprising considering the firm's parent, Zurich Finanical, is currently in negotiations to sell the fund company.

Zurich Scudder had hoped the now defunct division would allow the firm to expand its businesses as well as "foster innovation across the business units," Bell said.

Many companies that jumped into venture capital investing in the past couple of years are finding that venture capital is not quite what it was even as recently as a year ago, said Adam Reinebach, VP and head of research with Venture Economics, a information and research firm owned by Thomson Financial that tracks the private equity industry. (Thomson Financial is also publisher of MFMN.)

Taking a venture company public in today's market environment is something not likely to happen and most venture capitalist have scaled back on their investments, he said.

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