There is no question that the venture capital industry is contracting and will continue to do so for the foreseeable future.  According to our statistics which we compile with Thomson Reuters, in 2009 there were 794 venture capital firms that raised funds in the last 8 vintage years, down from 885 in 2008, a 10 percent decline.  You can see a full analysis of the size of the venture capital industry since 1980 on page 17 of our 2010 Yearbook available here.

The NVCA membership is a sub-set of this larger number and, contrary to overall industry trends, has remained stable this past year at approximately 425 member firms.  While this number is a decline from an all time high of approximately 475 firms, we have not seen a great deal of attrition on a net basis in the past membership cycle.  Our member firms continue to comprise more than 90 percent of the capital under management for the venture capital industry. 

With few exceptions, most NVCA resignations come from firms that are not planning to raise another fund.  They are winding down and can not justify membership given their uncertain future.  On the flip side, the importance of a collective voice on Capitol Hill, especially around critical issues such as carried interest taxation, energy legislation, and medical innovation has strengthened our membership base and compelled both emerging funds and established firms who have not previously considered NVCA membership to join this year.  Many firms have been energized by political threats and opportunities and believe the time is now to get involved and make a difference.  We couldn’t agree more.  We are grateful for the support and reiterate that our membership is our most important asset in advocating for the start-up ecosystem.