Pepperdine has a new study

out that attempts to shed some light on the clubby, shadowy world of private finance. Researchers polled experts in lending, mezzanine capital, private equity, venture capital and private businesses themselves. Not a big shock, but things don%u2019t look pretty, especially in the venture capital world.

A lot of the stats weren%u2019t surprising. According to VCs, there%u2019s been a 65% decrease in up-rounds (where a company gets a bigger valuation) in the last six months and more than 60% of those polled expect a longer wait for an exit. Similarly, the bulk of the companies getting funding are still California-based.

There does seem to be some shifts on where the money is going. After Northern California and Southern California the biggest area of investment geographically was in international companies. And investors said they intend to invest more in cleantech than software going forward. This is a big reversal, as software has long been the dominant category for venture deals, but it%u2019s unknown whether software has lost favor, or whether it%u2019s just become so pervasive that it doesn%u2019t really hold together as a category anymore.

But it%u2019s when you look between the survey of VCs and the survey of private businesses that things start to get ugly. The businesses, it seems, vastly over-estimate their ability to raise funds. 41% of them feel that they qualify for venture capital funding. Meanwhile, the VCs surveyed indicated that their firms are only doing a few deals every six months and go through one hundred business plans to close one deal. Clearly, the rate of acceptance isn%u2019t anything like 41%, says researcher John K. Paglia, Pepperdiine%u2019s Denney Academic Chair and Associate Professor of Finance.

A few more stats make that picture look worse. Researchers divided the portfolio companies into six stages and startups are still operating a loss in each of the first four. Those categories represent roughly 84% of all portfolio companies. That means the vast majority of privately held companies are still very dependent on venture money to stay in business. And investors aren%u2019t necessarily keen on their prospects. Respondents deemed between 12%-16% of companies generating revenues to be essentially %u201Cworthless%u201D and deemed 20%-26% of their pre-revenue investments to be %u201Cworthless.%u201D Ouch.

Add to this that 72.7% of VCs said they had a decreased appetite for risk and that more than half of those polled expect their firms to do between zero and three deals in the next year and you start to get the feeling things are going to get a lot worse for private companies, in aggregate, before they get better.

Of course life isn%u2019t that much better for the VCs: Sixty percent of them say their own prospects for raising new funds have declined over the last six months and 41% said they aren%u2019t planning on even attempting it in 2010.

Long term, shake-outs are good for the industry, Paglia notes. Once valuations finish falling, worthless companies are closed or sold at a loss and venture firms that can%u2019t raise another fund hang it up, venture capital will be a much healthier industry on the rise. The big question is just how long that reset takes.