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Limited partners in VC funds have grown more restless and demanding over the last year, as the economy has weakened and funds raised during the dotcom bubble have wound down. They're asking for stronger guarantees on returns, lower management fees and other concessions even from top-tier venture capital firms -- something they haven't done before, says T. Hale Boggs, a partner in the venture capital practice of law firm Manatt Phelps & Phillips. But Boggs' clients are also seeing more positive ways to get money back to LPs, he says, thus "making lemonade out of lemons."

More layoffs are coming to the San Francisco Chronicle, the union told employees last night -- details to follow. That means people who have endured four months of staff departures and goodbye parties from the current round of layoffs -- which finish this month -- will once again be coming to work every day not knowing whether they have a job. Private equity firms like Platinum that are investing in struggling newspapers should think hard about how to handle the human side of these businesses, which is as big a barrier to newspapers' economic health as the falling subscriptions and may in fact play a big part in causing readers to turn away.

It turns out that several of the ideas put out last summer for applicants wanting to start companies at the Silicon Valley incubator are starting to take shape -- and not just at Y Combinator. Y Combinator founder Paul Graham believes ideas about the evolution of technology are inevitable -- and Marc Andreessen may have picked up on a couple. He and his partner Ben Horowitz recently funded Rockmelt, which is working on a better browser, and Apptio, which wants to help Chief Information Officers at large companies figure out where and how they're spending money on information technology -- still an expensive and complicated task. As a side benefit, a company like Apptio could force enterprise software vendors to make better, cheaper software, another problem spotted by Graham as a big one that needs to be solved.

TruGenetics -- which emerged in June with the promise of free personal genetic scans to the first 10,000 people who registered -- has stopped taking registrations while "we work on developing a new strategy," according to a post on the company's Web site. Apparently, that promise was merely a way to collect registrations. TruGenetics now says that the funding to launch its genome scanning program still hasn't come through, "despite our best efforts and contrary to our expectations," according to a note circulating last week. Those people who have already registered can delete their records from TruGenetics' database and will be kept informed of any progress, the note said.

Complete Genomics expected to complete its $45 million funding round two quarters ago, but had the bad luck of starting out last September on the day Lehman Brothers failed. There was a "general freeze" in private equity investing, said Chairman and CEO Cliff Reid. "I didn't see it coming." Still, the company was able to raise as much money as it wanted to raise and was not materially damaged, he said. Its commercial gene sequencing center is now due to open in January and is expected to take the price of sequencing a genome down from $20,000 to $5,000.

Venture capitalists seem to be universally opposed to the Obama administration's proposal to regulate private equity if venture capital funds get caught in the net. Last month, while testifying before a Senate Banking subcommittee on behalf of the National Venture Capital Association, Trevor Loy -- the founder of Flywheel Ventures -- said he patiently explained to Senators why venture capital funds are not like hedge funds and why the regulations as they're now proposed could put some VC firms out of business. (See his testimony below).

Craigslist has flummoxed the newspaper industry by taking away millions of dollars in ad revenue. Yet it was trotted out this week on the cover of Wired as "a tragedy" and "a mess" -- "firmly stuck in 1999." Craigslist grows in spite of itself, the story said, noting its humble origins in 1995 as a mailing list for founder Craig Newmark, Newmark's disdain for wealth, the site's resistance to technical improvements -- which Wired couldn't help suggesting -- and its loyal, if sometimes unhappy, users.

There's a big gap between what people need to save water and what water startups are currently delivering, according to several big potential customers who spoke last night at a Palo Alto event sponsored by ImagineH2O. Representatives from Stanford, PG&E, Google, the East Bay Municipal Utilities District and the Sonoma County Winegrape Commission all said they still can't figure out how much water they're using -- partly because technology for smart water meters hasn't caught up to the smart meters and grids being installed for energy use.

A service to discover new music and concerts via social networks, iLike was acquired today by MySpace for a reported $20 million, just $3.5 million over what the company raised since 2002. Investors included TicketMaster for $13.3 million, former AOL president and CEO Bob Pittman and Silicon Valley venture capitalist Vinod Khosla for $2.5 million, […]

Energy and determination, intelligence and a sense of design, in exponentially decreasing order, said founder Paul Graham, who once wrote a book, "Hackers and Painters: Big Ideas from the Computer Age." But being a little crazy helps too. "If we get people who seem smart, and describe an idea that on the face of it seems crazy, there's a possibility that it's something crazy because it's new -- not that it's actually crazy," he said. "When stupid people describe ideas that are nutty, they usually are nutty. But when smart people describe crazy ideas, we consciously turn off our skepticism filters." Energy and determination were plentiful in Mountain View yesterday at Y Combinator's semi-annual Demo Day, a graduation-like ceremony for entrepreneurs who've completed the incubator's three-month summer camp.