VCs Turn Gloomy About Their Prospects: Report

Surprise, surprise. The third quarter Silicon Valley Venture Capitalist Confidence Index has just been released by Mark Cannice, professor of entrepreneurship at the University of San Francisco, and his findings show Bay Area VCs may be losing momentum on the confidence front. According to a survey of 33 investing pros, Cannice found their confidence — which he ranks on a 5-point scale — has dropped “significantly” from the previous quarter, marking the second quarterly decline in the VC index.

Tech VCs told Cannice they were mostly concerned about macroeconomic conditions that continue to fuel an uncertain exit environment. They also seem to share concerns over troubling valuation trends. Brian Panoff of Granite Ventures, for example, cited what he views as the “disconnect between private and public valuations (in certain sectors),” in Cannice’s report.

Other tech VCs pointed out that non-consumer-facing startups are facing a tough slog right now, given the hesitation of their enterprise customers to pick up new technologies in such a rocky market. Investors also told Cannice they worry that the social media bubble may be losing air.

Life sciences VCs, meanwhile, continue to fret over the lengthy regulatory process involved in obtaining FDA approval. And both IT and life science investors seem concerned about todays’ political environment, with Venky Ganesan of Globespan Capital Partners citing the “childish behavior of our politicians” as reason for some unease.

Of course, no one likes bad news, so it’s no surprise that Cannice works in some positive sentiments, too. Among them, this sentiment from Ganesan:

“People overestimate the short-term impact of technology and vastly underestimate the long-term impact of it. We are in the midst of a fundamental technology shift from PC to mobile, which is going to result in one of the largest legal wealth creation opportunities. So whether you are an investor or an entrepreneur turn off the talking heads on TV, tune out the nattering nabobs of negativity, and go out and build something insanely great!!!”

For more on the report, you can contact Cannice here.

*An earlier version of this piece misspelled ‘Silicon Valley.’

(Editor’s note: The word “CORRECTED” was removed from the headline of this story. PeHUB’s policy is to alert readers to any significant correction made to a story. Correcting the misspelling of “Silicon Valley” did not warrant adding “CORRECTED” to the headline of this story.)