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Venture-investor confidence at lowest point in 10 years

Silicon Valley venture investors’ confidence in the entrepreneurial environment fell in Q4 to its lowest point in a decade.

That’s according to the Silicon Valley Venture Capitalist Confidence Index, which registered investor confidence at 3.2, down from 3.52 the previous quarter.

The index measures venture capitalists’ estimates of the entrepreneurial environment in the San Francisco Bay Area over the next six to 18 months, with 5 indicating high confidence and 1 indicating low confidence. The latest 3.2 mark is the lowest since Q1 2009 when it was at about 3.

University of San Francisco School of Management Prof. Mark Cannice runs the index.

Cannice’s 60th consecutive quarterly report notes that the primary drivers of the low mark in the latest Q4 survey is political uncertainty and its impact on the health of the venture ecosystem, along with broader macroeconomic concerns.

Among the survey respondents was Mark Platshon of Icebreaker Ventures in Menlo Park, who wrote: “I am concerned that the government shutdown, China trade-war, Brexit and other political traumas could trigger slower growth or a recession. I think political turmoil domestically will impact the market as well.”

Two VC respondents who offered their comments off the record, reported “broad financial market uncertainty” and the “Bay Area innovation keeps on rolling in the cloud of federal and international uncertainty,” respectively.

Shomit Ghose of Onset Ventures in Menlo Park responded to the survey, saying that long term he is bullish and confident that the innovation economy will continue to define the future of business.

“In the short-term, however, the innovation economy is bound to feel the headwinds from the macroeconomy,” he said.

Action Item: USF School of Management: www.usfca.edu/management/svvcci.