Confidence among Venture Capitalists in Silicon Valley Falls in Q2

SAN FRANCISCO--()--Confidence among venture capitalists in the Silicon Valley fell markedly in the second quarter of 2010. The Silicon Valley Venture Capitalist Confidence Index® for the second quarter of 2010 registered 3.28 on a 5-point scale, dropping significantly from the previous quarter’s reading of 3.65, indicating a notable decrease of venture capitalists’ confidence in the future high-growth entrepreneurial environment in the Bay Area. This is the 26th consecutive quarterly survey and report and, thus, provides unique quantitative and qualitative trend data and analysis on the confidence of Silicon Valley VCs. Authored by Mark Cannice, professor of entrepreneurship and innovation at the University of San Francisco (USF) School of Business and Professional Studies, this quarterly VC Confidence Report is based on a June 2010 survey of 32 venture capitalists in Silicon Valley.

“Bay Area start-ups continue to be best positioned to capitalize on the disruptive market opportunities created by cloud computing, social media and clean-tech.”

Professor Cannice indicated that Silicon Valley venture capitalists’ confidence was diminished by macroeconomic concerns, regulatory constraints, and uncertain exit opportunities. For example, in their response to the Q2 survey, Dag Syrrist of Vision Capital stated, “Collective fear of sluggish growth in the overall economy will drive down investors’ perceived need to deploy capital.” While Tom McKinley of Cardinal Partners noted his concern stemmed from, “…the negative impact of the FDA on innovative companies...” Additionally, Igor Sill of Geneva Venture Management projected, “…there appears to be little appetite for IPOs over the next 6-9 month period…”

However, Cannice found that VC confidence in entrepreneurs in the Silicon Valley remains strong. Bruce MacNaughton of Crosslink Capital reasoned, “In great flux, new opportunities are uncovered by entrepreneurs thinking deeply in this unique geography.” Jeb Miller of Jafco Ventures noted, “Bay Area start-ups continue to be best positioned to capitalize on the disruptive market opportunities created by cloud computing, social media and clean-tech.”

In a similar survey of venture capitalists in China during Q2, Dr. Cannice and his co-author, Ms. Ling Ding, found confidence rising. Cannice noted the diverging sentiment of venture capitalists from the two countries reflects diverging macroeconomic trends and capital flows.

Both indexes are carried by Bloomberg Professional Services (ticker symbols: SVVCCI and CVCCI, respectively.) Please contact Anne-Marie Devine abdevine@usfca.edu for the complete Silicon Valley Q2 report.

Contacts

University of San Francisco Public Affairs
Anne-Marie Devine, 415-422-2697
abdevine@usfca.edu

Release Summary

Confidence among venture capitalists in the Silicon Valley fell markedly in the second quarter of 2010. This is the 26th consecutive quarterly survey by USF professor Mark Cannice.

University of San Francisco Public Affairs