Startup Ecosystem to Face Realism Rather Than Optimism In 2012
Date: Monday , January 02, 2012
Reports from this year’s Venture predictions survey conducted by the National Venture Capital Association (NVCA) and Dow Jones VentureSource reports that the Startup ecosystem and the venture capitalists are abound to face realism rather than optimism. Dow Jones VentureSource database tracks the activity of private investment firms and venture-backed companies in all industries and stages of development, worldwide.
When compared to last year's survey, forecasts from venture capital professionals and venture-backed CEOs are less confident and more measured for the coming year, with few notable bright spots. With all the concerns, the enthusiasm still awaits for the IT investment, particularly on the consumer side. Also, the focus will be on the startup company momentum, especially job growth. Yet, it is predicted that in critical areas such as IPOs and venture fundraising are moderate at best, reflecting ongoing, unavoidable challenges faced by VCs and entrepreneurs alike.
The VCs and entrepreneurs forecast a number of positives including valuations, headcount and global activity amidst the realities that face the industry. "We can expect a competitive environment for capital on both sides of the venture business in 2012," said Jessica Canning, Global Research Director, Dow Jones VentureSource.
The survey reports that the CEOs are more optimistic that the VCs on investment levels with overall 45 percent predicting increase in 2012 compared to 32 percent of VCs who expect to see investment levels rise. 36 percent of VCs see overall investment levels decreasing compared to 25 percent of CEOs. Most VCs predict investment increases in consumer IT (64 percent of respondent), healthcare IT (61 percent of respondent) and business IT (50 percent of respondent). About 73 percent of all respondents expect investment froth in consumer IT. On the flip side, 58 percent of VC industry respondents expect investment decreases in the biopharmaceutical and medical device sectors and 55 percent expect investment levels to decline in clean technology companies.