Silicon Valley Venture Capitalist Confidence Index™ Falls Sharply in Q2

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VCs Voice Concern over Political Uncertainty, Valuations and Exit Opportunities

Mark Cannice, University of San Francisco School of Management

“This decline in confidence appears to have been driven by continuing uncertainty in the macro environment, high late-stage valuations, and a somewhat less welcoming exit market,” said Mark Cannice, University of San Francisco.

The Silicon Valley Venture Capitalist Confidence Index™ registered 3.52 on a 5-point scale (with 5 indicating high confidence and 1 indicating low confidence) for the second quarter of 2017. This quarter’s index measurement fell sharply from the previous quarter’s index reading of 3.83. The Q2 rating, based on responses by 32 Silicon Valley venture capitalists, also fell below the 13.5 year average of 3.72.

This 54th consecutive quarterly survey and research report provides unique quantitative and qualitative trend data and analysis on the high-growth entrepreneurial environment in the Bay Area. Mark Cannice, department chair and professor of entrepreneurship and innovation with the University of San Francisco (USF) School of Management, authors the research study each quarter, surveying venture capitalists from more than 25 Silicon Valley firms.

In the new report Dr. Cannice wrote, “This decline in confidence appears to have been driven by continuing uncertainty in the macro environment, high late-stage valuations, and a somewhat less welcoming exit market than had been anticipated.” Dag Syrrist of Vision Capital, for example, voiced concern over “political uncertainty and overall economic climate, exasperated by directionless politics.” And Bill Reichert of Garage Technology Ventures said, “I think the venture ecosystem is healthy, but I am concerned about the macro environment. The IPO market has been good, but not quite as robust as we were hoping.” Additionally, immigration constraints and the Bay Area’s high costs were noted by some respondents as headwinds to venture formation.

Some venture capitalist respondents were more sanguine, however, noting an increase in venture investments in Q2 over Q1. For example, John Malloy of BlueRun Ventures indicated, “Despite well-deserved negative headlines within high-tech, there continues to be strong innovation in significant markets such as transportation, healthcare and next generation platform technologies.” And Jeremy Liew of Lightspeed Venture Partners highlighted “continued positivity.”

Cannice concluded the report saying, “Whether the decline in confidence is a tell for future capital flows or a reflection of current, but temporal, macro issues is unclear. In either case, the innovation engine of Silicon Valley continues to attract entrepreneurial talent from around the world and new impactful ventures can be expected to continue to surprise us.”

To review the complete report, please visit https://www.usfca.edu/management/svvcci

About the University of San Francisco
The University of San Francisco is located in the heart of one of the world’s most innovative and diverse cities and is home to a vibrant academic community of students and faculty who achieve excellence in their fields. Its diverse student body enjoys direct access to faculty, small classes, and outstanding opportunities in the city itself. USF is San Francisco’s first university, and its Jesuit Catholic mission helps ignite a student’s passion for social justice and a desire to “Change the World from Here.” For more information, please visit usfca.edu.

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