Right after Black Monday, analysts said venture capital would dry up. This tour-page special report shows the still thriving field finding money in new places but facing increased scrutiny.

CAMBRIDGE, MASS.—One year ago this month the stock market suffered its worst decline since 1929. In the wake of Black Monday, pundits prophesied dire consequences—for the economy in general and for corporate and entrepreneurial science and technology in particular. Corporate R&D budgets would be cut back in preparation for a drop in consumer spending and a concomitant drop in corporate profits, one argument went. Another said that high-risk entrepreneurial startups would be unable to find venture capital. Of all the high-risk, high-tech endeavors that had been tantalizing market investors before the crash, none had been flying higher than biotechnology. So biotechnology was ninny an analyst's prime candidate for a catastrophic fall in the days following Black Monday. Some even predicted a...

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