Venture Capitalists’ Confidence Reaches Three-Year High in Silicon Valley

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The Silicon Valley Venture Capitalist Confidence Index® for the first quarter of 2011, based on a March 2011 survey of 33 San Francisco Bay Area venture capitalists, registered 3.91 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence.)

"The trend of increasing IPO exits, rising LP funding, higher valuations and growing venture investment points to a healthy venture capital business model and portends an exciting year in the venture world," said USF professor Mark Cannice.

The Silicon Valley Venture Capitalist Confidence Index® for the first quarter of 2011, based on a March 2011 survey of 33 San Francisco Bay Area venture capitalists, registered 3.91 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence.) This quarter’s index rose significantly from the previous quarter’s reading of 3.75 indicating an increasing upward momentum in confidence since its low point in Q4 2008.

This is the 29th consecutive quarterly survey and report and, thus, provides unique quantitative and qualitative trend data and analysis on the confidence of Silicon Valley VCs in the future high-growth entrepreneurial environment. Mark Cannice, professor of entrepreneurship and innovation at the University of San Francisco (USF) School of Business and Professional Studies, authors the report each quarter.

In the report, Dr. Cannice indicates that optimism is growing in fits and starts depending on the sector in question. For example, Bill Reichert of Garage Technology Ventures, one of the VC respondents surveyed, stated, “Venture capital has become a tale of two cities: It is the best of times, it is the worst of times. It is the age of wisdom, it is the age of foolishness.” Reichert continued, “Or possibly four cities — consumer, enterprise, cleantech, and biotech.” Dino Vendetti of Formative Partners echoed this sentiment stating, “The social and mobile web ecosystems are growing at a torrid pace.”

Cannice concluded that the trend of increasing IPO exits, rising LP funding, higher valuations and growing venture investment--along with increasing VC confidence--points to a healthy venture capital business model and portends an exciting year in the venture world.

In a companion study on confidence among venture capitalists in China, Cannice and his co-author Ling Ding found confidence declining to a two-year low on concerns of bubble valuations, inflation rates and political uncertainty.

For the complete Q1 2011 report, please visit:
http://www.usfca.edu/uploadedFiles/Destinations/School_of_Business_and_Professional_Studies/documents/Cannice_SV_VC_Index_2011_Q1.pdf

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Anne-Marie Devine
University of San Francisco
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