Here is a piece from WSJ´s Venture Capital Dispatch blog by Scott Austin.
“How confident are venture capitalists about the industry right now? It depends on whom you ask, and how you ask it.
A small quarterly survey that checks the confidence meter of venture capitalists in Silicon Valley shows these investors lost some of their enthusiasm in the second quarter due to concerns over macroeconomic trends, unpredictable liquidity opportunities, and regulatory uncertainty specific to the venture industry.
As he does each quarter, Professor Mark Cannice of the University of San Francisco emailed Silicon Valley VCs in June and asked them to estimate their confidence in the San Francisco Bay Area entrepreneurial environment over the next six to 18 months. On a five-point scale, with five being the most confident, 32 VCs registered an average of 3.28. That’s lower than the first-quarter reading of 3.65 and ending five consecutive quarters of improvement.
So much for VCs getting their swagger back.
But wait, there’s another survey. This one, from executive-recruiting firm Polachi Inc., is much larger, polling more than 1,000 VCs nationwide. Among the survey’s six questions is, “Are you more confident about the state of the VC industry today than you were one year ago?” Fifty-six percent said yes.
As Polachi notes, that’s considerably better than in last year’s survey when 60% said no, even if that was during one of the worst years for venture investors on record.
No matter whether confidence is rising or not, venture capitalists have plenty to be worried about. According to the Polachi survey, the exit market is the top concern, followed by investor syndicate risk and their portfolios.
Cannice compiled comments from most of the VCs in the survey, asking them to clarify their confidence rating. One of the weightiest comments came from an anonymous investor who seems to have lost his confidence in everything: “Structural shifts in the venture business will constrain the availability of capital at a time when funds need cash. Several firms will collapse in the next 18 months. Add a bit of carry tax and corporate income tax rate increases and a soft Euro and US economy and you have a more difficult situation developing.”
Here are some select venture capitalist comments from Cannice’s survey (you’ll see a common theme):
Bob Ackerman, Allegis Capital: “While entrepreneurial activity continues apace, uncertainty around the broader funding and exit environments continue to place an on-going damper on new investment activity…Until either or both of these factors are addressed, capital investment in new ventures is likely to be moderate.”
Igor Sill, Geneva Venture Management: “Key to investment timing in start-ups is visibility in public market liquidity, and though we’ve seen a few IPOs, there appears to be little appetite for IPOs over the next 6-9 month period. Having said that, there are several outstanding, profitable and high growth private companies well prepared to go public when the public market window prevails. Optimistic employment metrics will go a long way in opening up the public markets for new tech offerings.”
Brian Panoff, Granite Ventures: “I think the fundamental value of innovative technology companies remains strong. In this type of economic environment, productivity gains through technology are more important than ever. My optimism is only tempered by instability in the capital markets and regulatory environments.”
Bill Byun, Samsung Ventures: “General deal flow is strong but the next few quarters will determine the enthusiasm, based mainly on market performance.”
Dan Lankford, Wavepoint Ventures: “The large tech companies have cash and are looking to fill their product pipelines, so we are starting to see some acquisitions. It would be helpful if the public equity markets could show some positive movement.”
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