Venture capitalists predict better times ahead in 2011 |
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Venture capitalists predict better times ahead in 2011
IPOs are on the upswing in recent months. Source: RenaissanceCapital
There's been a flurry of IPO and M&A activity in the U.S. as we close out the year. And venture capitalists -- who typically make their money when companies go public or get sold -- are predicting that the momentum will carry into 2011.
Two thirds of venture capitalists expect the number of IPOs from venture-backed companies to increase in 2011, while 81 percent envision more acquisitions, according to a survey released today by the National Venture Capital Association and Dow Jones VentureSource. More than half of the VCs surveyed also expect the quality of the acquisitions and IPOs to improve next year.
"The improving exit market and a renewed excitement in the IT sector have engendered a confidence among VCs and the CEOs of the companies in which we invest that promises to propel the start-up community forward in 2011," said NVCA president Mark Heesen in a statement. "While the venture industry will continue to evolve, and likely contract, the companies we fund will continue to grow, innovate and drive the U.S. economy.”
The IPO market remains relatively weak for Seattle area companies. In fact, just one local high-tech company -- Bellevue mobile software company Motricity -- completed an IPO this year. However, there have been a string of acquisitions, most notably EMC's proposed buyout of Isilon Systems for $2.25 billion.
According to the survey, 51 percent of venture capitalists expect investment levels to increase while 24 percent expect it to decrease next year. The sectors where VCs are most bullish include: Consumer Internet & Digital Media, Cloud Computing and Mobile/Telecom.
The VCs also predicted that small venture firms will have an advantage in 2011.
While the economy remains in a rut, sixty three percent of VCs and 64 percent of the CEOs predicted an improvement in the overall U.S. economy in 2011. Sixty six percent of the CEOs expect an increase in corporate IT spending, while 82 percent said they anticipate adding jobs.
To come up with the results, the NVCA and Dow Jones surveyed 330 venture capitalists and 180 CEOs of venture-backed companies earlier this month.
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