Equipped to Lead and Succeed

Venture Capitalists’ Confidence Declines for Third Consecutive Quarter

by Anne-Marie Devine

February 6, 2012

USF School of Management Professor Mark Cannice

SAN FRANCISCO — (January 31, 2012) The Silicon Valley Venture Capitalist Confidence Index® for the fourth quarter of 2011, based on a December 2011 survey of 30 San Francisco Bay Area venture capitalists, registered 3.27 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence.) This quarter’s index fell from the previous quarter’s reading of 3.41 and marks the third consecutive quarterly decline in the eight-year running research report.

This is the 32^nd 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 Management, authors the report each quarter.

In the report, Dr. Cannice indicates, “The responding venture capitalists in the Q4 survey pointed to international economic and political uncertainty along with a constraining national regulatory and tax environment for a decline in confidence in the future venture environment.” For example, David Pidwell of Alloy Ventures emphasized, “Uncertainty in the global macro-economy and the difficulties in extracting value (ROI) from venture capital investments presently.” Bill Reichert of Garage Technology Ventures reasoned, “On the plus side, the entrepreneurial energy pouring into Silicon Valley from around the world grows stronger every month. On the minus side, the lack of institutional LP support for early stage venture capital will leave hundreds of companies stranded when they need more capital later next year.”

On a positive note, Igor Sill of Geneva Venture Management observed that public market valuations are robust, offering optimism to Facebook, Twitter, Proofpoint, and a pipeline of others for a strong IPO market in 2012. Cannice concluded the report by saying the expected high profile IPO of Facebook may divert attention away from macro uncertainties and back to the business of value creation.

For the complete Q4 2011 Silicon Valley VC Confidence report, please contact Anne-Marie Devine at abdevine@usfca.edu.

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