Despite repeated declarations by venture capitalists that a crisis is the best time to make new investments, they are actually very pessimistic. The 28th Deloitte Brightman Almagor Zohar Israel VC Indicator Survey results for the first quarter of 2009, published yesterday, found that 64% of Israeli venture capitalists think that the current financial crisis has more impact on the high tech industry than the impact of the Internet bubble bursting had.
21% of respondents think the two crises have the same impact, and a minority thinks that the current crisis has less impact than the Internet bubble bursting.
The venture capitalists' pessimism extends to their forecasts about the performance of venture capital funds. For the first time, no respondent said that the overall economic climate will improve during the next six months. 79% of respondents think that the overall economic climate will worsen and 21% think that it will remain the same.
Only 3% of the respondents think that the indices will recover in the coming year, while 42% of respondents think that the global technology - sector based equity indexes (such as Nasdaq) will continue to fall in the coming year and 55% think that the indices will remain steady.
100% of respondents said that Nasdaq will not reopen for IPOs before 2010. 45% said that it will reopen in late 2010, and 29% said that it will only reopen in 2011, up from 16% of respondents in the previous survey for the fourth quarter of 2008.
Over the next six months, 73% of respondents believe that company valuations will fall, 24% predict that they will remain unchanged, and just 3% believe that company valuations will increase.
84% of respondents expect investment valuations (the value of start-ups on which the investment is made) to fall during the next six months, and 16% expect them to remain unchanged. No respondent expects investment valuations to increase.
Belying the mantra that the crisis ought to be exploited, 55% of respondents said that the crisis would not change their investment strategy in terms of stage of development, while 39% said that were shifting focus to later stage companies and existing portfolio companies, and just 6% said that they were shifting their focus to early-stage companies.
Whereas 78% of respondents in the Israel VC Indicator survey for the fourth quarter of 2007 said that they would make seed and first-round investments, only 50% of respondents in the current survey said that they will make these investments.
Published by Globes [online], Israel business news - www.globes-online.com - on April 1, 2009
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