Join Hands to Build a Smarter India: Sign in | Join now
News

VCs' Confidence on a Decline in Silicon Valley and China

By SiliconIndia  |   Friday, 04 November 2011, 04:19 Hrs   |    1 Comments
Print Email
Fremont: Venture Capitalists today are facing with fewer exit options, declining capital commitments and are making fewer investments in new high-growth ventures in Silicon Valley and in China. This has resulted into a decline in their confidence. The Silicon Valley Venture Capital Confidence Index for the third quarter of 2011, based on a September 2011 survey of 33 San Francisco Bay Area venture capitalists, registered a further low to 3.41 on a 5 point scale dropping significantly from the previous quarter's reading of 3.66. This is the second consecutive decline in the confidence index of the VCs. The report is authored by Mark Cannice who is a professor of entrepreneurship and innovation at the University of San Francisco School of Management.

The U.S. is undergoing financial crisis, and now it has become a global issue infecting countries and industries that have little or nothing to do with the crisis. China, despite of very strong economic growth, is also facing the similar scenario in the VC fraternity. Cannice indicates, "A number of responding venture capitalists in the Q3 survey pointed to troublesome macro conditions, an uncertain exit environment, high valuations, and regulatory burdens." Some of the main concerns of the VCs are not the great team and opportunities, it is rather the disconnect between private and public valuations and the possibility of the economy to worsen in the near future effecting the startup world directly.

In China, the confidence in the future high-growth entrepreneurial environment sunk to its lowest point, 3.21 on a 5 point scale, in the history of six and a half year old on-going quarterly survey. VCs estimate that the continued uncertainty in the market will lead to more concern on the erratic, inconsistent and unduly lengthy regulatory process and this might have a long-term negative impact on the VC fraternity and their business model in terms of funding and investments.

The IPO valuation of Chinese companies have dropped down in both domestic and global stock markets due to the accounting irregularities of some Chinese IPO firms disappointing global investors and negatively impacting the VC industry. According to Reuters in China, more than 24 Chinese firms that went public in the U.S. have had accounting problems since March.

The continuing downfall in the confidence among the Vcs reiterates their on-going concern on the overheated market and suggests that VCs are reviewing their investment strategies. The ongoing European debt crisis also adds concern for VCs and are discouraging them from new investments. The whole industry is keeping its fingers crossed to see the light on the other side of the tunnel very soon.

Experts on SiliconIndia
Sunil  Bhat
Project Management
HCL Infosystems Limi
Haresh  Motirale
Founder Director
Brandniti
Jeya  Padmanaban
President
JP Research, Inc.
Sonal  Rochani
President
Shakti Foundation
Chetan  Nagaonkar
Managing Director
eStomi Technologies
Deepak  Gupta
Business Analyst
Wipro Technologies
Sarvesh  Vaidya
Senior Director - HR
Tangoe
Aarthi  G R
HRM Specialist
PlasmaGen
SIGN UP FOR STARTUP DIGEST
Write your comment now
 
Reader's comments(1)
1: Unreadable english constructs

The whole industry is keeping its fingers crossed to see the light on the other side of the tunnel "every" soon

should be

The whole industry is keeping its fingers crossed to see the light on the other side of the tunnel "very" soon
Posted by:anonymous - 07 Nov, 2011
SiliconIndia About Us   |   Contact Us   |   Help   |   Community rules   |   Advertise with us   |   Sitemap   |  
News:       Technology   |   Enterprise   |   Gadgets   |   Startups   |   Finance   |   Business   |   Career   |   Magazine  |   Newsletter   |   News archive  
Cities:        CEO   |     Startup   |   Mobile   |   CIO   |   Women   |   BI   |   HR   |   SME   |   Cloud   |   Marketing   |   QA   |   Java   |   Web Developer  
Community:      Members   |   Blogs   |   Indian Entrepreneurs   |   Gyan   |   Advice   |   Community   |   Find   |   Events   |   CXO Insights  
Job Board:      Jobs   |   Freshers   |   Companies   |   HR Speak   |   Forum  
Online Courses:   Web Developer   |   Java Developer   |   CCNA Training   |   SEO   |   SAS   |   SQL Server 2005   |   J2EE
Education:   MBA   |   MCA   |   Engineering   |   Training Institute
Life:          Real Estate   |   Travel   |   Finance   |   Gadgets   |   Movie Reviews   |    Jokes  
Send your feedback and help us continue to improve SiliconIndia
© 2014 InfoConnect Web Technologies India Pvt Ltd. all rights reserved