SQUAW VALLEY, Calif. -- Venture capitalists will tell you that they're not affected by short-term trends, like the recent plunge of newly public Nasdaq stocks. But at

Red Herring Venture 2000

, a gathering of tech companies looking for venture capital and VCs with money to invest, the effects of Nasdaq plunge on valuations is palpable.

These long-haul thinkers are renegotiating -- downward -- the value of the companies in which they invest. That could indicate that they don't expect the value of comparable public companies to be roaring back anytime soon.

Raising Cain?

Let's start with the experience of one commercial banker at the conference, someone who prefers to remain anonymous. A company that this banker works with has been raising a new round of private capital -- one that, at the share-price terms negotiated with new investors, would value the company in the neighborhood of $50 million. But just last week, after everyone had finalized the "term sheet" -- the document, in VC investing, that covers the basics of how much of a company a VC is buying, at what price -- the VC came back to the company with an announcement: The company in question was now worth less than half the number that was on the term sheet. Gulp.

This week, it looks as if part of the difference will be split, says the banker, so it looks as if the readjustment may not be as dramatic as it originally looked. But this story doesn't seem to be an isolated event.

And the problem isn't that VC funding is drying up. Far from it, in fact.

"The money is there ... there's no shortage of that," said the commercial banker.

Better Deals

Andreas Stavropoulos, a director at VC firm

Draper Fisher Jurvetson

, says his firm has been on both sides of the trend. Some companies in which his firm has already invested "had their term sheets renegotiated on them" by subsequent investors. In other situations in which his firm was about to invest money, the changing market conditions meant Draper Fisher Jurvetson was able to get itself better deals than planned.

Naveen Jain of

InfoSpace

(INSP) - Get Report

says the valuation shift has given his firm negotiating power in potential acquisitions of privately held companies. "It's much easier to do deals now," he says. "Initially, everybody had dreams of being hundred-billion-dollar companies. Those dreams have been shattered."

The funny thing is that the many presentations made at the Venture 2000 conference by private companies looking for money hardly ever get specific about the green stuff. (By the way, the description "private companies looking for money" is beginning to seem redundant.) At most investment conferences run by Wall Street brokerages, the company presentations last about 30 minutes -- a ridiculously short time in which to get a picture of what a firm does and how well it does it.

Elevator Shoes

Well, here at Red Herring Venture 2000, the presentations last a maximum of about 15 minutes. Some of them, the so-called elevator speeches, last five minutes. (The "elevator" is a reference to the dictum that an entrepreneur ought to be able to pitch his company to a VC if he's lucky enough to have a few seconds of his time during an elevator ride.) The difference between a half-hour speech to investors and one lasting 15 minutes, it appears, is that for the shorter one, the CEO skips all the slides in his Power Point presentation that have the numbers on them -- stuff like how much money the company has made, and how fast it thinks its revenue will grow.

That doesn't mean that these companies can't get your attention. One that managed to cut through the clutter in five minutes was

Icebox.com

. To demonstrate the company's strategy of using the Internet to change the way TV pilots are made, the firm showed an example of the animated programming on its Web site: a nutty, offensive and gleefully inaccurate episode in the life of

Abraham Lincoln

called "Hard Drinkin' Lincoln," in which the alcoholic president, working as a hotel clerk, meets up with

Mahatma Gandhi

.

Will Icebox.com be able to get this on TV? Don't know. How will Icebox.com make money? Don't know that, either. But entertaining these questions sure beats thinking about the falling value of Net stocks.