Sunday, December 21, 2008

WSJ: Venture Capital Gloom

Venture capitalists, who invest in private companies with the aim of profiting later when their startups go public or get sold, are typically optimistic investors–you have to be to deal with such risky and illiquid assets. But according to a new survey Wednesday by the National Venture Capital Association, 92% of venture capitalists predict a slowing of venture investments in 2009 compared with this year, when total investment is expected to reach $29 billion to $30 billion.

New companies–those that haven’t yet found funding–are in for a particularly rough ride. Ninety six percent of survey respondents said it will be more difficult for new companies to get money in 2009. What’s more, 93% of respondents said it will be harder to sustain investments in existing companies next year.

Some sectors may see investment growth, including cleantech and and life sciences, according to the NVCA survey. But other sectors will lose out, with 79% of respondents forecasting a decline in investment in the semiconductor industry. In addition, 71% of respondents predict a slowdown in investnent in the media and entertainment sector and 60% figure there will be a dropoff in wireless communications investments.

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