The economic recession certainly has taken a toll on early-stage technology companies. But Seattle area venture capitalists are getting more bullish about the prospects of their portfolio companies, according to a survey released today by the Washington Technology Industry Association. The tech group's second quarter Venture Capital Outlook Survey shows increased optimism when it comes to hiring, revenue growth and early-stage investments.

"The predicted growth in hiring and increasing company revenues substantiate our prediction last quarter that overall growth and recovery for the Washington technology industry is on the near-term horizon," said Susan Sigl, the former venture capitalist who was appointed president and CEO of the WTIA last month. "With nearly half of the VCs surveyed reporting an increase in early stage investment and none predicting large-scale layoffs, the technology sector has become less volatile. VCs and their portfolio companies are finally starting to see the light at the end of a long, dark tunnel."

Sixty three percent of the venture capitalists surveyed predicted moderately better revenue growth for their portfolio companies during the second quarter, while 13 percent predicted substantially better growth. Twenty five percent said revenues would stay the same.

Susan Sigl

In terms of hiring, 25 percent said that portfolio companies will increase their workforces by more than 10 percent. And none predicted large-scale layoffs of more than 10 percent.

Meanwhile, 43 percent of respondents said they will make investments in early-stage companies -- which the WTIA said is the largest response for that category of investing since the survey started two-and-a-half years ago.

The WTIA survey follows a report last week from PricewaterhouseCoopers and the National Venture Capital Association which showed a slight increase in venture capital investments in Washington state during the first quarter. Washington ranked fifth in terms of investment dollars with $168 million going into 22 deals.