What happened to old-fashioned venture capital? And why have so many contemporary practitioners of this trade forsaken "patient and brave" investing for the dream of a quick financial killing? Clearly, venture capitalists who came of age in the 1980s are marching to a different beat, write business-school professors William D. Bygrave (of Babson) and Jeffry A. Timmons (of Harvard) in their new book, Venture Capital at the Crossroads (Harvard Business School Press, 800-545-7685, $35). The reason, they argue, has a lot to do with the hundreds of millions of dollars of institutional money that flooded the market during the '80s and the bloated expectations many of the investors had for annual returns of 30% and up. Based on past performance, they say, a more realistic goal would have been a percentage in the teens.

The book does a good job of tracing venture capital from the 1920s and 1930s, when the Rockefellers and other wealthy families seeded companies like Eastern Airlines and Xerox, to today's breed of financial engineers "who only bring capital to venture-capital deals." At their best, the authors note, venture capitalists play "catalytic roles" in building companies, a standard set by General George Doriot, a onetime Harvard Business School professor who went on to head American Research Development (widely acknowledged as the first venture-capital firm in the United States). But lately, most venture capitalists have tended to favor straight deal making. Unless they are able to return to their roots, Bygrave and Timmons warn, company owners will have to find other sources of risk capital. -- Bruce G. Posner