SAN FRANCISCO, Nov. 26, 2019 /PRNewswire/ -- The Silicon Valley Venture Capitalist Confidence Index™ for the third quarter of 2019 registered 3.58 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence). This quarter's index measurement fell from the previous quarter's index reading of 3.76 and below the nearly 16 year average of 3.70.
This is the 63rd consecutive quarterly survey, and thus, provides unique quantitative and qualitative trend data and analysis on the confidence of Silicon Valley venture capitalists in the future high-growth entrepreneurial environment. Dr. Mark Cannice, professor of entrepreneurship and innovation with the University of San Francisco (USF) School of Management, authors the research study each quarter.
In the new report, Professor Cannice indicated "The decrease in sentiment was tied in part to concerns on lofty valuations due to a continuing enormous supply of capital being made available to new ventures as more mega funds ($500M or more) are being established." For example, Venky Ganesan of Menlo Ventures wrote, "The private markets have been fueled by the availability of cheap capital and the surge of new entrants to private investing." Bob Ackerman of AllegisCyber confirmed there is "too much capital chasing too much undifferentiated innovation with unrealistic return expectations."
Dr. Cannice also noted "challenging trends to the financial model of venture capital come in the context of continuing uncertainty in the larger economic and political environment." To that point, Dag Syrrist of Vision Capital reasoned "We're settling in an 'expect the un-expected mentality,' flattening equity markets and no end in sight to trade friction and policy inaction." Additionally, Ricky Lu of CZV Capital elaborated, "The trade uncertainty has continued to put pressure on the venture community and increased our scrutiny of start-ups."
Cannice concluded the report by writing "With new sources and unprecedented amounts of capital being made available to new ventures and evolving expectations of public markets for venture-backed firms in terms of paths to profitability, it could be argued that the venture industry is itself in the midst of a transformation."
About the USF School of Management
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SOURCE University of San Francisco