Washington state venture capitalists are worried that a faltering economy may harm their portfolio companies' ability to grow.

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Washington state venture capitalists are worried that a faltering economy may harm their portfolio companies’ ability to grow revenues, a survey by the Washington Technology Industry Association said Monday.

The survey, which polls local venture-capital firms about investment plans for the third quarter, indicated “concern about the implication of the economy for the sales of their companies,” said the association’s CEO, Ken Myer.

That’s one more challenge for venture-capital firms, which already are keeping startups in their portfolios for longer than expected amid a dry market for initial public offerings.

None of the more than a dozen firms polled expected to see a Washington IPO this quarter, the survey said.

Nevertheless, the firms remain optimistic about hiring. The majority polled predicted a 10 percent increase in work-force growth.

The survey also forecasts a “slight decline” in the valuation and the number of new deals during the third quarter, a typical seasonal variation.

Web-delivered services remained the highest-growing sector among local venture investments, said Myer.

A dearth of IPOs has also meant declining performance for venture-capital investments, but returns are still above those for investors in public markets in the majority of cases.

The National Venture Capital Association said Monday that short-term (one-year) returns on private equity investment dropped 7.6 points to 13.3 percent in the first quarter of 2008. Three-year performance dropped 0.2 percentage point to 9.5 percent.

“The IPO market has now been essentially shut down for venture-backed companies for over seven months. Combined with a skittish M&A market, shorter-term performance returns are and will continue to be impacted,” association President Mark Heesen said in a statement.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com