Survey: VC Firms See Improving Conditions, Industry Contraction

Authored by Mark Hefflinger on December 17, 2009 - 8:43am.

Arlington, Va. - Venture capitalists are cautiously optimistic about the improving economy, yet also realistic about the inevitable contraction of the industry, according to an annual survey released on Wednesday by the National Venture Capital Association (NVCA).

According to respondents, the venture industry will begin to see gradual increases in investment levels and exits in 2010, but the asset class will continue to shrink in size over the next five years.

The largest amount of optimism lies in areas such as clean technology investing, growth equity and later stage companies, as well as ongoing opportunities overseas.

"It is readily understood by the venture capital community that our industry is going to contract in size going forward," said Mark Heesen, president of the NVCA.

"That will mean fewer firms, for sure, but not necessarily fewer companies funded. There is a great deal of innovation taking place and venture capitalists who have the track record to raise funds will be well positioned to build companies."

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