Fund companies are making bets that you're eager to sink your teeth into the forbidden fruit that is venture capital investing. The big question for investors: Will these funds have access to the juiciest items, or just low-hanging fruit?

In the last 90 days, fund companies have filed or launched at least five

closed-end funds for modest investors. These funds are designed to make significant investments in private companies, essentially hunting for a ground-floor stake in the next

Microsoft

. Before that, industry watchers say, regular folks could only choose from some 10 closed-end funds that fished extensively in the venture capital, or VC, pond -- historically the dominion of institutions and "qualified investors," a.k.a. millionaires.

The new funds have minimum investments ranging from $50 to $10,000 and come hot on the heels of record-setting investments and returns in pre-IPO companies, particularly those in the technology sector. While the funds open the tony VC club's door to modest investors, some industry watchers worry that the funds won't get access to the best deals.

"When somebody tells you that they're going to go put some money in a private

company, I would say good luck," said

(ATCHX)

Amerindo Technology manager Alberto Vilar during a recent

interview. "That market is an old-boy network market."

Another question is whether the risk levels of these VC funds are suitable for the average investor. "There's a lot of these all of a sudden and I'm not sure how successful they'll be. They're making some pretty risky investments," says Jonas Max Ferris, co-founder of mutual fund Web site

MaxFunds.com

.

It's easy to see why both investors' and fund companies' interest in pre-IPO investing is on the rise: It's an area that's posted market-beating returns and fund companies have noticed that it's also drawn a gush of cash.

Last year, the average VC fund posted a 146% return, according to private-equity tracker

Venture Economics

, compared with a 21% return for the

S&P 500

and an 86% return for the tech-heavy

Nasdaq Composite

. Since Jan. 1, the average VC fund is up more than 50%, according to hedge fund Web site,

HedgeFund.net

. Investors noticed last year's gaudy IPO returns (the

(IPOSX)

IPO Plus Aftermarket fund gained 115%) and might see VC as a way to swing for the seats. Nearly half of 1999's IPOs were venture-backed companies.

"There's been a lot of money made in young and emerging tech, and people probably think private-company investing helps you get in further ahead of the curve," says

Morningstar

analyst Chris Traulsen.

And no doubt fund companies enviously watched more than $46 billion flow into VC funds last year, up from some $28 billion the year before. After all, the average U.S. stock fund has $400 million, according to Morningstar.

But investors might be too quick to leap on these opportunities.

"Everybody's experience in this market has been that the further out they go on the risk scale, the more rewarded they are without much risk," says Philadelphia-based consultant Burt Greenwald. "There's a lot of people on a high wire that think they're only about a foot off the ground."

Investing in VC and closed-end funds poses risks distinct from buying publicly traded securities through

open-end funds.

Investing in pre-IPO companies, even "late stage" shops nearing an IPO, is the equivalent of a home run swing. These companies are typically unprofitable and bet on one or a precious few niche products or services. While there's no shortage of managers who'll boast that they bought

America Online

for pennies before its IPO, the same folks rarely mention the whatadog.coms they bought that went nowhere.

"Are all of these companies going to be successful? Are they all going to be the next

Cisco

? Certainly not," says John Forlines, co-president of

OffRoad Capital

, a fledgling online VC firm that has sold stakes in 10 private companies to qualified investors.

And then there are the odd twists of closed-end funds, the traditional open-end fund's obscure sibling.

Unlike traditional open-end funds, which can only invest 15% of their assets in private companies, closed-ends have a finite number of shares and don't have to cash out their investors' shares at will. After selling their shares in their initial offering, they either list the shares on an exchange where they trade like a stock or they only cash out shares on preset dates that may be years away. If a fund doesn't trade on an exchange, it's often nearly impossible to buy shares once its initial offering closes.

The upshot: Since closed-end funds don't have to regularly raise cash to meet redemptions, they're much better able to invest in private companies. Like plenty of other closed-end funds, this VC fleet has plenty of quirks.

They can essentially be put into two piles: tech with a VC bent and full-bore VC. The first crowd is composed of

Munder Capital@Vantage Trust

and

John Hancock Venture Technology

, which both have $10,000 minimums and haven't launched yet.

Neither of these tech funds will be listed on an exchange. Rather, the funds will offer to redeem up to 5% of the funds' shares quarterly at net asset value. That's not enough liquidity for many investors.

In the other camp are more pure VC vehicles from two fledgling money managers:

VCVillage.com

and

meVC

.

VCVillage.com Opportunity

, which will be pitched through its

Web site with a $50 minimum, plans to cash out its shares at the end of 2008, according to its registration statement. There's no guarantee you can get your money out before then.

meVC's two funds are set to be listed on the

New York Stock Exchange

. This increases your liquidity, but adds a perennial closed-end problem: discounts. Due to flagging demand, most closed-end fund shares trade at a discount to their net asset value. The firm's first offering,

meVC Draper Fisher Jurvetson Fund 1

(MVC) - Get Report

, closed at 17 1/2 on Wednesday, below its $19.07 net asset value.

Pricing is also an issue. Since private companies aren't publicly traded, they're typically priced at cost until they have an IPO or other major event.

Some also wonder if these funds' managers will get access to good companies, or simply pick among the leftovers.

Among this recent spate of funds, VC is a sidelight for mutual fund companies like

John Hancock

and

Munder

. It might be the focus for meVC and VCVillage.com, which both have some industry veterans on board, but some wonder if they'll be able to get their hands on hot deals.

"It's tough to build a network of relationships that will get you ready access to good companies," says OffRoad Capital's Forlines.

Despite these risks, many believe intrigued investors can take a "wait and see" approach because more funds will probably follow.

Big fund companies, including

Fidelity

,

American Century

, and

ScudderKemper

, have their own venture capital businesses. And

Putnam

has a stake in high-profile VC shop

Thomas H. Lee

-- the two firms run the

TH Lee.Putnam Internet Partners VC Fund

for accredited investors.

Officials at Putnam and American Century deny any current plans to launch VC funds for mutual fund investors, but others say as long as investor dollars flow, more products will follow.

"It's not certain what kind of products they'll come out with. That they will come out with products is no question," says Greenwald.