VCs Say 2009 Will Be a Tough Year

In keeping with my predictions series, here are the results of a recently released survey by the National Venture Capital Association featuring predictions about venture capital in 2009. The survey includes responses from more than 400 venture capitalists and was taken between 11/24 and 12/12/08. Some takeaways:

  • 92% of VCs think 2009 funding will decrease compared to 2008
  • Clean Tech and Biotech were seen as the biggest growth areas
  • Media and Semiconductors were seen as the biggest shrinkage areas
  • More than 60% of VCs predict a slowdown in seed and early-stage financing
  • 72% of VCs think the IPO market will re-open in 2010 or thereafter (i.e., not in 2009)
  • VCs are indirectly predicting a shake-out: 96% say that more VC firms will not be able to raise money.
  • 92% agree that venture returns will drop over the next 5 years
  • In a rare bit of optimism, only 56% of VCs think the economy will worsen in 2009. 19% actually think it will improve.

There are also some good historical stats in the back of the presentation. Takeaways:

  • VC fundraising peaked in 2000 at $104B
  • The minimum in the last decade was 2002 at $3.8B
  • The last three years have averaged around $30B

Here is the press release: Venture Capitalists Predict a Difficult 2009 (PDF). Here are the survey slides (also PDF), which I’ve also embedded below via Slideshare.

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