The venture capital industry will consolidate in 2008.

That's the forecast from a survey of more than 170 venture capitalists in a report released Monday by the National Venture Capital Association.

Fifty-seven percent of those polled predicted the population of venture firms will shrink in 2008, while 84 percent said the survivors will raise funds as large or larger than they have now.

“For venture capital firms, 2008 will be the year we begin to see larger funds raised at a faster pace, as many firms in the industry will focus on sectors that have increasing capital requirements such as life sciences and clean technology,” Mark Heesen, president of the NVCA, said in a statement.

VCs were bullish on the initial public offering market for venture-backed companies, with 59 percent predicting further recovery compared with 22 percent seeing a flat market and 19 percent projecting a weaker market.

That contrasted with the view on acquisitions in which 65 percent forecast flat or lower valuations, compared with 35 percent seeing portfolio companies fetching higher prices.

Still, some feared the effect of an economic slowdown.

“Exits will dry up significantly in 2008–by at least 50 percent–because there’s going to be an economic downturn; as a result, IPOs will essentially disappear," Don Caldwell, chief executive of Cross Atlantic Partners, said in a statement released by the NVCA. "Similarly, when there’s uncertainty in the economic environment, the acquirers fold their tent, too; and, for those acquirers who stay in the market, it means that the value of deals will drop. The net result of this is that LP distributions will drop sizably.”

On average, VCs polled forecast U.S. investment levels of $27 billion, roughly flat with 2007 levels.

But cleantech will remain hot, they said, with 80 percent predicting that sector will grab more funding in 2008 and 61 percent forecasting that it will be overvalued.

The survey also touched on presidential politics, with 39 percent calling Hillary Clinton the most likely to succeed President George W. Bush, followed by Rudy Giuliani (21 percent), Barack Obama (16 percent), and Mitt Romney (11 percent).