Amid a slumping initial public offering market, first-quarter venture capital returns fell 7.6 percent from the previous quarter, leaving investors waiting longer to cash in on startup funding, the National Venture Capital Association reported this week.

While the outlook for short-term returns was down, five-year and 20-year returns remained strong, the trade group reported. The figures are based on a gauge of cash flow and returns at over 1,860 venture capital firms and private equity partnerships across the nation.

"The IPO market has now been essentially shut down for venture-backed companies for over seven months," Mark Heesen, the group's president, said in a statement. "Combined with a skittish M&A market, shorter term performance returns are and will continue to be impacted," he said.

Not a single venture-backed firm went public over the second quarter, the first quarter in 30 years without an IPO. That's leading some market watchers to warn of a growing capital crisis in the start-up community.

According to a recent survey by KPMG, investors aren't expecting a turnaround in the IPO market for another two years, prompting many VCs to extend exit timelines by 12 months or more.

Despite the declines, Heesen said returns on venture capital continue to outperform other investment options, including the public markets.