New USF Report Indicates Rising Caution in Local VC Community
SAN FRANCISCO--(Business Wire)--The Silicon Valley Venture Capitalist Confidence Index for the
fourth quarter of 2007 registered 3.54 on a 5-point scale, plunging
from the previous quarter's reading of 4.14 to the lowest reading in
the history of the Index. This significant drop in Bay Area VC
confidence portends an uncertain investing climate in the local
high-growth enterprise sector in the coming months. Authored by
professor Mark Cannice of the University of San Francisco School of
Business and Management, the current quarterly VC Index (Bloomberg
ticker symbol: USFSVVCI) reading is based on a January 2008 survey of
28 San Francisco Bay Area venture capitalists.
"VCs expressed concern over the volatile credit markets and
potential broader economic decline - conditions which may make venture
exit opportunities more difficult." said Mark Cannice of the
University of San Francisco.
Venky Ganesan of Globespan Capital Partners offered a sobering
assessment when he remarked, "The Cinderella-like credit ball is over.
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." "Short term, the
credit crisis is really distracting the financial sector. Like its
impact on the economy itself, it will probably be short lived, but it
will reduce the enthusiasm for risk," said Steve Carnevale of Point
Cyprus Ventures. While VCs are cautious, author Mark Cannice noted,
"an underlying confidence in the long term health of the venture
market remains, particularly in the Bay Area entrepreneurial
eco-system."
In a separate report by Mark Cannice and Ling Ding, the China
Venture Capitalist Confidence Index (Bloomberg ticker symbol: CVCCI)
for the fourth quarter indicated a more modest decline in Chinese VC
confidence coming in at 3.82 on a 5-point scale. Cannice and Ding
noted that Chinese VC confidence also fell on fears of a US economic
slowdown, but were more closely related to increasing Chinese
governmental regulation and inflated enterprise valuations.
The complete VC Index Reports for Q4 are available at
www.EntrepreneurshipProgram.org. For more information on either
report, please contact Professor Cannice at cannice@usfca.edu or
415.385.9591.
University of San Francisco
Mark Cannice, 415-385-9591
cannice@usfca.edu
Copyright Business Wire 2008
