[Posted on January 29, 2008 - 4:54 PM]
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DiggThe University of San Francisco's quarterly study of the relative optimism of startup investors falls right in line with other measures of the health of the economy, reflecting a recent sharp decline despite the supposedly long-term nature of the business.
USF's Silicon Valley Venture Capitalist Confidence Index for the fourth quarter of 2007 came in at 3.54 on a 5-point scale, plunging from the previous quarter's reading of 4.14. The figure for the period is the lowest since the USF School of Business and Management put the index together in the first quarter of 2004.
The survey interviewed 28 Bay Area VCs and found overall attitudes reflecting the comments of Venky Ganesan of Globespan Capital Partners, who said the coming credit crunch is likely to hit the economy hard, and that high-tech companies will not be immune.
"The Cinderella-like credit ball is over," he said. "The clock has struck midnight, and the free money liquidity party we all have been enjoying is going to result in a terrible hangover. I fear that we will have a severe recession, and this will impact high-tech entrepreneurial activity in a big way."
USF professor Mark Cannice, who oversees the survey project, said volatile credit markets and potential broader economic declines would also put a damper on exit opportunities.
In a separate survey conducted by Cannice and associate Ling Ding, respondents were less despondent about the outlook for venture capital investing in China. Their China Venture Capitalist Confidence Index for the fourth quarter landed at 3.82 on a 5-point scale. Those results were driven partly by the U.S. economic outlook, but also by sentiment that the markets there are currently overvalued. - Clifford Carlsen
See the Silicon Valley index
See the Chinese index
For more, see TechNudge
