Good-bye! We venture capitalists like to think of ourselves as giants striding across the technology landscape, showering money on terrific young entrepreneurs, adding value, creating jobs, nurturing real companies. We are financial samurai. But I am giving it up. Why?

First, technology supply is bloated. Innovation is not dead, but demand for new technologies is moribund and will continue to be weak for at least the next five years. During the boom times, VCs financed more than 5,000 new companies a year in information technology, communications, biotechnology, and the Internet. The problem is that the buyers of new technology cannot possibly utilize all this stuff. There is a very real limit to what can usefully be deployed. IT and communications spending is no longer growing at 15 percent per year; growth will be in the middle single digits for at least the next five years. Therefore, few software and communications companies will enjoy the double-digit growth that inflames company valuations and makes VCs rich.