SAN FRANCISCO, Feb. 25, 2020 — The Silicon Valley Venture Capitalist Confidence Index™ for the fourth quarter of 2019 registered 3.60 on a 5-point scale (with 5 indicating high confidence and 1 indicating low confidence). The Q4 Index measurement, based on the responses of 30 Silicon Valley Venture Capitalists, was little changed from the previous quarter’s index reading of 3.58, and also stayed below the nearly 16-year average of 3.70.
This is the 64th consecutive quarterly survey and research report (since Q1 2004), and provides unique quantitative and qualitative trend data and analysis on the confidence of Silicon Valley venture capitalists in the future high-growth entrepreneurial environment. Mark Cannice, professor of entrepreneurship and innovation with the University of San Francisco (USF) School of Management, authors the research study each quarter.
“The positive drivers of sentiment included expectations of growth opportunities resulting from continuing advances in potentially disruptive technologies, along with a healthy exit market for existing portfolio investments,” Professor Cannice indicated in the new report. “Sentiment was tempered somewhat by concerns over high valuations and the reception by the public markets of some venture-backed companies that has been less than welcoming of late.”
Jeb Miller of Icon Ventures, one of the responding venture capitalists in the Q4 2019 survey, credited a “robust supply of capital, healthy exit environment, and return to the discipline of capital efficiency versus the growth-at-all-costs mantra of the unicorn class,” for his high confidence.
Tim Draper of Draper Associates, another respondent in the Q4 study, emphasized, “Financing the transformation of health care, governments, insurance, real estate, finance, and banking at a time when there is AI and Bitcoin – a perfect storm.”
“The Bay Area has become so expensive that smart entrepreneurs are locating elsewhere,” noted Bob Pavey of Morgenthaler Ventures, highlighting macro challenges in the Q4 study. “On top of that, money from China which has come largely into the Bay Area and supported its growth is drying up due to the trade war and CFIUS.”
“The Silicon Valley innovation ecosystem is losing its mojo, and its reputation as the global focal point for technology innovation,” concluded Bob Ackerman of AllegisCyber.
Dr. Cannice concluded the report by stating that, “While optimism was communicated on the continuing level of technology led opportunities and a continuing supportive exit environment, persistent concerns on inflated valuations and a reassessment of those valuations in the context of recent troubled IPOs and attempted IPOs brought sobering recognition of the disparity of private and public perceptions of value.”
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Founded in 1925, University of San Francisco’s School of Management is on the forefront of educating the next generation of conscious, mindful business leaders. Each year those students join the over 40,000 School of Management alumni around the world to create ethical and innovative change in the private, public, and non-profit management sectors. The School is accredited by the Western Association of Schools and Colleges Senior College and University Commission (WSCUC) and the Association to Advance Collegiate Schools of Business (AACSB).