The venture capital industry is supposed to be firing on all cylinders, with plenty of money and ideas driving the next great Internet, biotechnology or alternative energy company.

But there are warning clouds on the horizon -- namely the lack of initial public offerings and acquisitions.

That trend has spooked one big name in the venture capital business. According to a story in The New York Times, Sevin Rosen Funds -- a 25-year-old firm with offices in Texas and California-- has decided to return the $250 million to $300 million it had already raised for its tenth venture fund.

"The traditional venture model seems to us to be broken," Steve Dow, a general partner at Sevin Rosen Funds, told The Times.

Sevin Rosen is not a big player in the Pacific Northwest, though it is one of the largest investors in Bothell-based Alder Biopharmaceuticals. It is also an investor in XenSource, a Palo Alto, Calif.-based company that recently opened a Redmond office after hiring former Microsoft managers.