According to USF Index: Venture Capitalists' Confidence Slips Slightly in Third Quarter of 2004

Business Wire, Oct 22, 2004

SAN FRANCISCO -- The University of San Francisco Silicon Valley Venture Capitalist Confidence Index released today came in at 4.05 on a 5 point scale for the third quarter of 2004. This number is slightly down from the first and second quarters when it came in at 4.3 and 4.1 respectively, but still suggests a high level of Bay Area financings and entrepreneurial activity in the coming months.

The USF index measures and reports the opinions of professional venture capitalists in their estimation of the high growth venture entrepreneurial environment in the San Francisco Bay Area over the next six to 18 months. The third quarter results are based on an October 2004 survey of 50 San Francisco Bay Area venture capitalists.

Mark Cannice, co-creator of the USF index, attributes this quarter's investor confidence to the assessment of real business factors including: strong M&A momentum, low overhead costs, increasing number of start-up activities, and the perception that more Asian, especially Chinese, companies are coming to the United States to seek capital, while many mid-cap U.S. companies are seeking opportunities in Asian markets.

However, compared with the first two quarters of 2004, some venture capitalists are less upbeat about the economy due to its slow recovery, uncertainty around the presidential election, cautious corporate spending, and concerns among large companies about doing business with start-ups. The first quarter brought expectations of improvement in the initial public offering market and the macroeconomic picture. Those have faded through the summer as the economy hit a "soft patch."

"While there does seem to be a lot of activity, the economy also feels dampened while people wait to adjust accordingly based on their political views and the outcome (of the presidential election) in November," said Brendan Richardson of Vision Capital.

The index, published every quarter, is co-authored by Mark Cannice and Roger Chen, professors at the USF School of Business and Management. Please find the full report at: http://www.usfca.edu/sobam/nvc/cindex_3_2004.htm.>

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