Venture Capitalists’ Confidence Declines for Third Consecutive
Quarter
Location: San Francisco
Author:
Anne-Marie Devine
Date: Friday, February 3, 2012
The Silicon Valley Venture Capitalist Confidence Index® for the fourth
quarter of 2011, based on a December 2011 survey of 30 San Francisco Bay
Area venture capitalists, registered 3.27 on a 5 point scale (with 5
indicating high confidence and 1 indicating low confidence). This
quarter’s index fell from the previous quarter’s reading of 3.41 and
marks the third consecutive quarterly decline in the eight-year running
research report.
“On the plus side, the entrepreneurial energy pouring into Silicon
Valley from around the world grows stronger every month. On the minus
side, the lack of institutional LP support for early stage venture
capital will leave hundreds of companies stranded when they need more
capital later next year.”
This is the 32nd consecutive quarterly survey and report and, thus,
provides unique quantitative and qualitative trend data and analysis on
the confidence of Silicon Valley VCs in the future high-growth
entrepreneurial environment. Mark Cannice, professor of entrepreneurship
and innovation at the University of San Francisco (USF) School of
Management, authors the report each quarter.
In the report, Dr. Cannice indicates, “The responding venture
capitalists in the Q4 survey pointed to international economic and
political uncertainty along with a constraining national regulatory and
tax environment for a decline in confidence in the future venture
environment.”For example, David Pidwell of Alloy Ventures emphasized,
“Uncertainty in the global macro-economy and the difficulties in
extracting value (ROI) from venture capital investments presently.” Bill
Reichert of Garage Technology Ventures reasoned, “On the plus side, the
entrepreneurial energy pouring into Silicon Valley from around the world
grows stronger every month. On the minus side, the lack of institutional
LP support for early stage venture capital will leave hundreds of
companies stranded when they need more capital later next year.”
On a positive note, Igor Sill of Geneva Venture Management observed that
public market valuations are robust, offering optimism to Facebook,
Twitter, ProofPoint, and a pipeline of others for a strong IPO market in
2012. Cannice concluded the report by saying the expected high profile
IPO of Facebook may divert attention away from macro uncertainties and
back to the business of value creation.
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