SiliconBeat

This shouldn’t come as any surprise, but venture capitalists are forecasting a “difficult 2009″ for their industry and for capital markets in general, not to mention the national economy, according to a press release today from the National Venture Capital Association.

Ninety-two percent of venture capitalists surveyed by the group are predicting a slowing of venture investment in 2009, compared to 2008, which is expected to reach the $29 to $30 billion range by year end. Sixty-one percent of respondents believe the decline will be greater than 10 percent and fall below $27 billion in 2009.

Almost all venture capitalists (96 percent) predict it will be harder for new companies to get funded in 2009. As for those companies that already have venture backing, 93 percent of all venture capitalists survey “believe that it will be harder to sustain existingportfolio companies in the coming year.”

Most VCs predict a recovery in 2010 “when the IPO market is expected to re-open”.

You say you didn’t know that the market for initial public offerings was closed to begin with?

Well, this year we’ve had only one initial public offering in Silicon Valley. That’s the smallest number of IPOs since the Mercury News first started tracking them in 1985.

Next year won’t be pretty for many start-ups, judging from comments made by NVCA President Mark Heesen.

“…most venture capitalists will say that a down market is the best time to invest when valuations and competition are lower. There is no recession on innovation and great ideas will still get funded - especially in sectors that have more insulated demand such as clean technology and life sciences.”

Any upside to the situation looks to belong to the VCs.

“2009 will be a year of anticipation for the venture capital industry as the economic turmoil will engender a fair amount of Darwinian change. The recession and shuttered IPO market will place tremendous pressure on portfolio companies to tighten their belts and re-tool where necessary. We will likely see a marked slowdown of new investments as venture capitalists turn their attention to supporting these existing companies.”