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The power of positive thinking doesn’t seem to pack much punch when it comes to venture capitalists investing in companies. Though happy thoughts about the economy abound, VCs put less money to work in growing companies in the third quarter than in the two previous quarters. According to VC database crunchers, investors pumped $4.5 billion into new companies in the third quarter, compared with $6 billion in the second quarter of 2002 and $6.4 billion in the first quarter. The most recent numbers come from the Money Tree Survey. So, investments are still trending downward — even though that’s counter to what many tech lawyers in the Valley seem to be witnessing. “It does feel like it’s picking up,” said Mark Tanoury, a Cooley Godward partner. More and more Valley lawyers are repeating the mantra “it’s picking up,” suggesting the Valley VC investment pace has, finally, hit the bottom. Yet clients that do come through Tanoury’s office these days are raising less money when they do score capital. For one thing, Tanoury said, the cost to run a business in the Valley has declined: There’s cheaper office space and no desire to mount costly marketing campaigns. And when they do hand out cash, VCs are demanding bigger chunks of the companies than they could dream of getting during the boom, Tanoury said. Though it’s less than in the quarters that preceded it, the $4.5 billion in the third quarter is nothing to sneeze at. For lawyers like Tanoury, who started work at Cooley in 1982, that quarterly figure is still a big number. It’s more money, for example, than was put to work during any single quarter in 1995 and 1996. So looking on the bright side, things are just returning to the way they used to be.

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