Seattle VCs predict sharp increases in layoffs at companies |
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 VCs predict sharp increases in layoffs at companies
We've been giving some ink over the past couple of days to the quarterly MoneyTree and VentureSource venture capital reports. The numbers were all over the map and I pointed out in my column last week that they showed some unusual trends, including the biggest surge in venture capital deals since the good-old-dot-com-boom-days of 2000.
Obviously, we're not living through that period again. So, what's really going on in the venture business?
A new Venture Capital Outlook survey released today from the Washington Technology Industry Association offers a little more guidance on what can best be described as a turbulent market. And it's looking like it may get ugly on the layoff front in the coming months.
Perhaps the most disturbing figure from the report is this: Half of the venture capitalists surveyed said that their portfolio companies will cut staff by more than 10 percent in the third quarter. That compares to just 14 percent who responded that way during the previous quarter. (It may be time to get that resume in order).
That's bad news for anyone working in the startup business, but it probably indicates that the recession has persisted longer than many VCs anticipated.
Last fall, we reported on a number of layoffs at startup companies and while those may have bought some companies a little extra runway, the cash supplies appear to be running low.
Another interesting trend from the survey is that the average size of investments continues to decline. VCs say that about 50 percent of new deals will be in the $3 to $6 million range. That compares to 70 percent that were in that range last quarter.
Despite those trends, VCs at least say they are still looking for new opportunities. (Perhaps that's due to the continuing erosion of valuations at startup companies). A whopping 80 percent of respondents said they plan to make one or two new investments in Washington companies during the third quarter, historically the slowest quarter on record as folks head out for summer vacations.
Buerk Dale Victor's Andy Dale may have summarized it best in the press release when he we he said: "We are navigating for long-term success and anticipate a brighter 2010."
Here's a copy of the full report.
John Cook is co-founder of TechFlash. Follow him on Twitter @johnhcook.
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.
