NVCA’s Heesen says report on death of VCs erroneous

March 2, 2011

A report claiming the number of U.S. venture capital firms has contracted by more than half in the past three years is incorrect, the president of the National Venture Capital Association said.

The report, which recently ran in the San Jose Mercury News, said the number of VC firms has dwindled to roughly 400 today from about 1,000 in 2007. It cited the National Venture Capital Association as its source.

“Have there been firms shut down? Absolutely,” NVCA President Mark Heesen told Reuters this week. “But has the number been cut in half? No.”

Heesen said 2010 figures for the number of firms have not yet been released.

The 10-year period ending in 2009 showed a net increase in the number of firms, he added, noting the count rose to 794 from 753 in 1999.

In addition, the NCVA’s MoneyTree Report, prepared in conjunction with PricewaterhouseCoopers and using data from Thomson Reuters, showed that 2010 marked the first increase in annual VC investment since 2007.

Venture capitalists invested $21.8 billion in 3,277 deals last year, an increase of 19 percent in dollars over the prior year.

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