Flickr photo via James Bowe

It has been about a decade since the bloom fell off the dot-com rose. Many of the employees and entrepreneurs who worked at failed Internet businesses have already moved on, chalking it up as an important life experience.

But the economic disintegration from that period is just now starting to catch up to the venture capital firms which backed everything from Pets.com to Freeinternet.com to HomeGrocer.com. Venture capital returns for the 10-year period ending Sept. 30, 2009 stood at just 8.4 percent, down from 10-year returns of 40.2 percent for the period ending Sept. 20, 2008.

That's a pretty significant fall, and it could get even worse as the inflated dot-com returns no longer get counted in the 10-year totals.

“It has taken a full decade after the technology bubble burst for the venture industry to fully realize the impact of that era and its aftermath,” said Mark Heesen, president of the NVCA, in a release. “The significant returns created by the robust exit markets of the late1990s have carried the industry for a long period of time. The new reality is much more somber for many venture firms. There are still healthy returns to be made in venture capital, but until the venture community sees a more vibrant exit market we do not expect marked improvement overall.”

Those are pretty tough words coming from the industry's chief advocate, but they do spell the reality of the situation. Shrinking returns are leading some to predict that venture capitalists will have a much harder time raising money from the big college endowments, pension funds and other financial organizations that have supported the industry over the years. In fact, Seattle-based Frazier Technology Ventures recently gave up on its plans to raise a new fund.

The 10-year return is the most frequently cited metric to gauge the success of venture capital firms.

The shorter-term and longer-term metrics for venture capital appear a little bit brighter. Three year, 5-year and 10-year returns at venture capital firms outpaced the Nasdaq, S&P 500 and Dow Jones Industrial Average as did 10-year and 15-year returns.

But, even so, those shorter-term returns were nothing to write home about. For the quarter ended Sept. 30, 2009, venture capitalists saw a 3-year return of just 1.3 percent. For the 5-year period, it stood at 4.9 percent.

Those aren't the big blockbuster numbers that limited partners like to see. And the one-year returns were even worse, reflecting the extremely tight exit market in 2009. Venture capital returns stood at negative 12.4 percent for that period, which compared to a 1.5 percent gain for the Nasdaq.

[Flickr photo via James Bowe]

John Cook is co-founder of TechFlash. Follow on Twitter @johnhcook.