Seattle venture capitalists say deal valuations to sink in Q1 |
Connect with TechFlash on our Facebook page for all the latest technology news headlines and commentary, plus information and access to special events, photos from events, promotions and more.
Today On Techflash
- Startup of the Week: LocalBonus aims at 'buy local' movement
- Seattle webcomic The Oatmeal generates Tesla-Edison controversy
- Amazon falls on world's most valuable brand list; Microsoft at No. 5
- Former Yahoo CEO Scott Thompson resigns from F5 board
- 350 million Windows 7 devices to be sold this year: Microsoft
- Microsoft rolls out facial recognition for Windows Kinect
Mass High Tech
Seattle venture capitalists say deal valuations to sink in Q1
The WTIA venture capital survey predicts declining valuations
It is going to get worse before it gets better. That's how I read the latest survey from the Washington Technology Industry Association. All of the venture capitalists surveyed predict that deal valuations will decrease across all stages of privately-held companies in the first quarter. And -- not surprising -- no one expects any initial public offerings.
The survey found that 22 percent of VCs expect substantially lower valuations at the early-stage, while 78 percent predict moderately lower valuations. At the mid-stage, one third of respondents said that deal values will decrease substantially while 67 believe they will decrease moderately.
The interesting thing: No one is predicting higher valuations for the first quarter.
We've seen some of this first hand. Yesterday, Smartsheet.com raised $1.25 million, but it was at a lower valuation than the previous round.
Other entrepreneurs simply are bypassing venture funding all together since they don't want give away a portion of their companies at the deal terms now available.
"My advice to entrepreneurs is to delay raising money right now if you can. Terms are hard to swallow," one Seattle Internet entrepreneur told me yesterday.
No wonder that access to capital was the number one issue cited by VCs in the survey.
Thirteen percent of VCs said that hiring will decline by more than 10 percent in the first quarter, while 75 percent said hiring will stay the same.
Obviously, we've tracked a number of layoffs in the tech sector in recent weeks. And -- based on our tip line of layoffs -- it doesn't look like it is going to get better for some time.
This is not the first survey predicting tough times ahead. The WTIA surveyed technology companies in the state last October, finding that more than half expect demand for their products to decrease. Another 56 percent said that the economy has greatly reduced their hiring outlook, while 38 percent said they have reduced or delayed their capital fundraising efforts.
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.
TechFlash Team
Recent Sponsor Posts
Follow, like, and connect to a broader audience for your company!
The Puget Sound Business Journal announces Social Madness: A Corporate Social Media Challenge, presented by Capital One Spark Business. This a local and national challenge that will spotlight the best social media programs of companies in 43 cities. The local challenge begins (following the nomination period) on June 1, 2012. The promotion will culminate in a national bracket challenge that will crown Social Madness champions in 3 categories based on company size. To see the official rules, visit http://www.socialmadness.com/rules.
For more information on how your company can participate, visit the nomination page here. Nominations are due May 15th.
BizDev Seminar Series - Leadership: Rallying People to a Brighter Future
Join us for this one-of-a-kind seminar series where you hear directly from the experts about hot topics to grow your business.
The skills to be effective as a leader can be learned. What are the skills and attributes needed to be effective top leaders? How do you tell what level your people are at, and what development skills each person needs? Workshop attendees will learn the answers to these questions and more.
Tuesday, May 17, 2012
8:30am - 10:30am
The Harbor Club, Seattle
Register here.
