Silicon Valley Venture Capitalists’ Confidence Springs Back

Business Wire, April 08, 2009

USF Report Reveals Insights from VC Community

SAN FRANCISCO -- The Silicon Valley Venture Capitalist Confidence Index™ for the first quarter of 2009 registered 3.03 on a five-point scale, rising from the previous quarter’s reading of 2.77 and breaking a five quarter trend of consecutive new lows in VC confidence. The 3.03 reading indicates an uptick in venture capitalists’ confidence in the future high-growth entrepreneurial environment in the Bay Area. Authored by Associate Professor Mark Cannice of the University of San Francisco (USF) School of Business and Management, this quarterly VC Index (Bloomberg ticker symbol: USFSVVCI) is based on a March 2009 survey of 30 Silicon Valley venture capitalists.

“While concern over the global economy and financial system remains, a seed of hope appears to be taking hold among a majority of the venture capitalist respondents in the March 2009 survey,” explained Dr. Cannice. In the survey, Richard Yen of Saban Ventures offered, “There’s some hope that the worst economic times are behind us...” Debra Beresini of invencor said, “…there are signs that venture firms are beginning to invest again…” Cannice noted that a number of VCs see this economic downturn as a good time to invest in new ventures. For example, Prashant Shaw of Hummer Winblad Venture Partners noted, “In a struggling economy, the real innovators emerge. And for firms like ours who have capital, there is no better time to invest in new startups.” In addition Jeb Miller of JAFCO offered, “We view this as a very promising time to start a new company. Big companies have cut back on product roadmaps and compensation and there is plenty of capital and strong talent available for new ventures.”

In recently completed academic articles, Cannice and co-author, Associate Professor Cathy Goldberg, found that VC confidence tended to correlate with new investments and liquidity events. Cannice expects that a rising sentiment among venture capitalists will tend to lead to increased investment in new enterprises and increased prospects for an eventual recovery to the high-growth venture environment and overall economy. The complete Q1 Report is available at www.Cannice.net.