Going by the National Venture Capital Association, the drying-up of investments will result in a substantial reduction in the number of venture capital companies - firms that steer Silicon Valley ideas towards profitability - over the next couple of years!

Statistics show that since the end of 2007, the number of venture-capital principals - those who are directors of start-up companies and generally make the investment-related decisions - has already plunged by over 15 percent. Gary Morgenthaler of Morgenthaler Ventures noted that the number of venture capital firms tumbled to 760 a year back from a peak of 960, with a further plunge being quite apparent.

In fact, a lot of whirlwind activity is going on in the recession-hit venture capital arena - some noteworthy firms and partners have quit; general partners and underperformers have been forsaken; and venture-capital bigwigs have retired!

According to the pension funds and other partners who sponsor venture capitalists, there has been a sizeable thinning of returns in the last eight-year period.

Commenting on the situation, Panda Hershey - director of global private markets for TIAA-CREf pension fund - said at the Venture Capital Investing Conference: "It is very tough to make a commitment to a new venture fund these days. Many of us benefited in '99 and 2000, but subsequently it became very tough for venture as a whole to get returns."