Venture Capitalists are increasingly optimistic about the immediate future of investing in Silicon Valley. Their confidence registered 3.75 on a 5 point scale, with 5 indicating high confidence and 1 indicating low confidence,あaccording to the quarterly Silicon Valley Venture Capitalist Confidence Index released today.
The index polled 35 San Francisco Bay Area venture capitalists in December 2010あabout how they viewed the high-growth venture entrepreneurial environment in the San Francisco Bay Area over the next 6-18 months.
It found that confidence had ticked up slightly to 3.75 from 3.70 a quarter earlier, as VCs continue to see promise in an improving exit environment and steadily rising public capital markets.
The survey respondents all agreed that the strength in confidence is clearly related to increasing exit opportunities through both acquisition and the long awaited return of the IPO market.
It also found that the increase in acquisitions provides a context of competitive bidders to drive demand for IPO exits. And new technology developments and social trends are creating fresh market opportunities forあentrepreneurs and their venture backers.
Additionally, the report found that the strength in M&'A exits is being driven by growing corporate cash balances that have decided it is now worth it to chase venture-backed innovation.
Such growing corporate curiosity is a good sign for a community that has long questioned whether a possible tech bubble has been scaring away VCs spooked by still-shaky markets.
This fourth quarter readingあconfirms an upward trend in confidence that is now at its highest point in two years.
Still, some VCs polled recommended caution until valuations have been clearly sorted out &8212' a trend that could be helped by the types of high-profile IPOs like LinkedIn&'s public debut yesterday and Nielsen&'s $1.6 billion emergence Tuesday &8212' and investors understand the space more clearly.
a4ぎAVenture capital backed start-ups and financings are seeing a new renaissance and the reason is a4ぎﾋ廚lomosol,a4ぎa4&'' said Venky Ganesan of Globespan Capital Partners. &''No, ita4ぎa4г not a new drug but rather my coined term for the four major trends powering technology: Cloud, Mobile, Social, and Local. The wealth creation driven by Clomosol will dramatically impact both the local Bay Area economy as well as the overall technology sector.&''
&''However, Clomosol is not for everybody and side effects might include increased traffic, a shortage of engineers, and high valuations,&'' warned Ganesan. &''Please talk to an experienced VC before embarking on this trend.a4ぎ
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Companies: Globespan Capital Partners, Silicon Valley Venture Capitalist Confidence Index
Companies: Globespan Capital Partners, Silicon Valley Venture Capitalist Confidence Index
Riley McDermid is a contributing reporter to VentureBeat. She was previously the online editor at institutional investing and trading forum Markets Media, which she joined in 2008 from Dow Jones/MarketWatch in New York. Her work has appeared in the The New York Times, the Associated Press, Portfolio Magazine, The Wall Street Journal, and Barrona4ぎa4г. She has won awards from the American Society of Business Publishers and Editors, the Magazine Association of the Southeast, the Mississippi Press Association and the Atlanta Press Club, and was a finalist for the Pacemaker Prize for excellence in news reporting.
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