This is according to the Silicon Valley Venture Capitalist Confidence Index prepared each quarter by Mark Cannice, a professor at the University of San Francisco. The index fell in the fourth quarter to 3.27 from 3.41 in the third quarter. (Five represents maximum confidence.) It was the third consecutive decline.
Cannice surveyed 30 venture capitalists in December to assemble the outlook on the investment environment 6 to 18 months down the road. Worries rose up about international economic and political uncertainty along with tax and national regulatory constraints, particularly life sciences regulations. Also highlighted was a decline in available seed funding, according to Cannice’s report.
“The uneven exit environment and the lackluster performance of some firms that did exit recently also added to a generally cautious outlook,” he wrote.
One venture capitalist cited in the report, Bill Reichert of Garage Technology Ventures, concluded that the entrepreneurial energy in Silicon Valley is high. “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 (this) year,” said this managing director.
“A little wind may have left the sails after some of the big name IPOs failed to live up to the overblown expectations,” offered Tom Rodgers, a partner at Advanced Technology Ventures. But “in the long term this Darwinian contraction should lead to a healthier, more stable and more rational ecosystem.”
The index report can be found here.