Thursday, January 30, 2014
Venture Capitalists' Confidence: Highest since 2007
The Silicon Valley Venture Capitalist Confidence Index® for the fourth quarter of 2013, based on a December 2013 survey of 32 San Francisco Bay Area venture capitalists, registered 3.94 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence). This quarter's index rose slightly from the previous quarter's confidence reading. The Q4 confidence reading made for six consecutive quarters of increasing sentiment among the responding venture capitalists to this quarterly survey and research report.
This is the 40th consecutive quarterly survey and research report, the 10-year anniversary of the Index. Each quarter's index provides 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 quarterly research study.
In the new report, Cannice writes, "Momentum appears positive for venture investors and for their innovative portfolio firms." For example, Sandy Miller of Institutional Venture Partners said, "Good performing tech IPOs brighten the prospects for all young tech companies, and I am optimistic that 2014 will be a strong year. There's never been a moment in history when there are so many private venture-backed technology companies with real scale and rapid growth." Tim Draper of DFJ reflected, "Venture Capital and entrepreneurship have gone through a very difficult decade and things are finally looking up. I look forward to see the renewed optimism in our world. One reason is that companies have been working hard for a decade with very little liquidity, and suddenly there is liquidity."
"High potential portfolio firms at various stages of development are well poised to take advantage of this more liquid exit environment," concluded Cannice. To that point, John Malloy of BlueRun Ventures detailed, "The market is very positive, both for growth round valuations and exits. Companies started two to five years ago, that can show growth, are well-positioned in the current entrepreneurial environment."
Some venture investors raised caution, however. Jon Soberg of Blumberg Capital said, "I am optimistic on the future six to 18 months, but I think we may see some slowdown in the public markets that could impact the overall environment." Robert Ackerman of Allegis Capital stated, "While the level of innovation in Silicon Valley is unprecedented in its scope, there is risk of over heating in some areas, including social media and social commerce."
The current Q4 Index includes a special retrospective on ten years of research into Silicon Valley venture capitalist confidence, and is available here: https://www.usfca.edu/management/news/Silicon_Valley_Venture_Capitalist_Confidence_Index_Q4_2013/