Cleantech the Lone Bright Spot for US VC 2009 Outlook
U.S. venture capitalists have an overwhelmingly cautious outlook for 2009, according to an annual survey by the National Venture Capital Association.
Dow Jones VentureWire reports that most think investment will fall significantly from the roughly $30 billion that the NVCA expects will be deployed this year. Of the more than 400 respondents to the survey, 61% said investment would be less than $27 billion in 2009.
Three quarters or more predicted flat or decreasing investment in every sector save for cleantech, where 48% foresaw an investment increase. Information technology was especially out of favor, with 50% or more predicting investment declines in Internet, software, wireless, media and semiconductors. The chips sector fared the worst in the survey, with 79% predicting a decline. For biotech, 42% predicted a decline while 38% said medical device investing would fall off.
The message for entrepreneurs was not encouraging — 93% of VCs answering the survey agreed that it would be harder to sustain portfolio companies and 96% agreed that it would be harder for new companies to get financed.
VCs surveyed also expect the industry to have fewer resources, with 85% saying that institutional investors will cut commitments to venture capital and 96% agreeing that more VC firms will be unable to raise money.
A majority — 56% — of venture investors said the U.S. economy would worsen in 2009 and 72% said the IPO market would not reopen until 2010 or beyond.
The NVCA sought to find something positive in the results of the survey: “Most venture capitalists are predicting a very difficult 2009 but anticipating a much improved 2010,” NVCA President Mark Heesen said in a press release announcing the results. “Those firms and companies that can weather this storm — and there will be those that do not — will emerge strongly.”
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