SAN FRANCISCO – An index of venture capital confidence rose slightly during the third quarter despite VC-backed IPO busts during the period like Facebook and Zynga.
The Silicon Valley Venture Capitalist Confidence Index, a quarterly survey of 31 Bay Area VCs launched in 2004, rose to 3.53 in the third quarter on a five-point scale (with “5” indicating highest confidence). The index was 3.47 in the previous quarter.
VCs responding to the to the Q3 survey “pointed to concerns over stubbornly high valuations despite recent venture-backed public market disappointments such as Facebook, Zynga and Groupon, and despite the overall performance of the venture asset class,” Mark Cannice, a University of San Francisco management professor and survey compiler, said in releasing the results.
Despite continuing concerns about the global economy, the pace of the U.S. economic recovery and upcoming U.S. elections, Cannice said some VCs expressed optimism that “positive technology trends [will] continue” and that Silicon Valley would benefit from those trends. Among them are mobile technologies, cloud computing and so-called “big data.”
“The IPO market remains open for high quality issuers like Palo Alto Networks and the strategic exit environment remains healthy as legacy vendors put their cash to work acquiring innovation,” Jeb Miller of Jafco Ventures (Palo Alto) said in response to the VC survey.Silicon Valley VCs were somewhat more optimistic during Q3, according to a regional confidence index.
Other survey respondents cited emerging opportunities as smart grid and renewable energy technologies are rolled out. California is likely to lead most of the nation in deploying those technologies.
Still, some respondents worried that despite growing innovation and entrepreneurship, the underlying ecosystem remains strained. One respondent warned of continuing engineering shortages along with a lack of affordable housing in the Bay Area. The VC executive also cited a “generally dysfunctional approach to California’s fiscal and regulatory challenges.”
The survey found that VCs are also worried about a lack of venture funding for health care technology startups. One respondent predicted that the lack of capital for medical technology “will get worse before [it] gets better.”Related stories:Innovations requires less talk, more action
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