VCs are Showing Increased Optimism

Mass High Tech reports executives in the Venture Capital industry are showing increased optimism in our industry.

While polling local venture capital firms, it seems as though when gauging sentiments year over year, the majority of management teams and partners at VC firms in the Boston area last year felt the market was “broken”. Conversely, In a more recent survey, “56 percent of 1,000 respondents said they are more confident or optimistic than they were a year ago.”

Also, when asked about new deals, over 70% or respondents to a Framingham based executive search firm Polachi Inc. survey said they were not worried about their new deals.

While this is good news and might make the industry sleep a little better at night, I don’t think the industry is in total recovery just yet. John Jannorone of the Wall Street Journal indicated recently that “Thomson Reuters estimates U.S. venture-capital funds raised just $1.9 billion in the second quarter. By comparison, in the same period of 2000, the peak year, funds raised $33 billion. In 2009, just 170 funds raised new money, compared with 749 in 2000.”

John also mentions that during the technology boom at the end of the last decade there was a greater chance to take early-stage companies public. That being said, in 2000 some 263 venture-backed companies had initial public offerings, Thomson Reuters says. Even in 2007’s bull market, only 86 such firms had IPOs, and just 26 have gone public so far in 2010.

I believe OpenView Venture Partners Strategy of investing in Expansion Stage companies helps to mitigate some of the numbers above. But the industry needs to find new ways to continue to be relevant and prosperous in this economy.

Peter Zotto
Peter Zotto

Peter Zotto is the GM at Price Intelligently. Previously he was an analyst at OpenView where he helped to identify qualified investment opportunities.
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