Wednesday, April 24, 2013

Silicon Valley Venture Capitalists’ Confidence Up for Third Consecutive Quarter

The Silicon Valley Venture Capitalist Confidence Index® for the first quarter of 2013, based on a March 2013 survey of 30 San Francisco Bay Area venture capitalists, registered 3.73 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence). This quarter’s index is up from the previous quarter’s confidence reading of 3.63, and marks the third consecutive upward move in VC confidence.

This is the 37th consecutive quarterly survey and research report, providing unique quantitative and qualitative trend data and analysis on the confidence of Silicon Valley venture capitalists in the future high-growth entrepreneurial environment. Mark Cannice, department chair and professor of entrepreneurship and innovation with the University of San Francisco (USF) School of Management, authors the research study each quarter.

In this latest report, Cannice finds a depressed exit market for venture-backed firms in the first quarter of 2013 was not enough to reverse the positive overall trend in confidence of Silicon Valley venture capitalists. For example, Bill Reichert of Garage Technology Ventures shared, “We’ve waited through the chilling effect of the troubled IPOs of Zynga and Groupon. There is less frothiness in social, local, mobile, and gaming. Calmer heads seem to be prevailing, and the overall market is up.” Mark Platshon of Birchmere Ventures struck an optimistic chord saying, “The Valley will always reinvent itself or change to build new approaches.”

However, not all venture capitalists who responded to the Q1 survey agreed with the view of a more munificent environment. For example, Igor Sill of Geneva Venture Management argued, “Despite signs of an improving economy and new found stock market optimism, I sense considerable concern over the impact of governmental policy on the venture capital industry.” Bob Ackerman of Allegis Capital added, “While innovation is alive and well, costs are up, staffing is a major challenge, and early-stage capital formation is clearly under pressure in some sectors of the market.”

Professor Cannice concluded the report with, “While the forces of creative destruction (Schumpeter) apply to the industries that finance innovation and new venture creation as well as to the enterprises that are financed, the impact of these structural shifts on the overall productivity and competitiveness of wide swaths of American business is difficult to predict.”

Complete Silicon Valley Venture Capitalist Confidence Index® for the first quarter of 2013.

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