The National Venture Capital Association surveyed 170 of its members, and this is their collective wisdom for 2008:
The sectors VCs are most bullish about are Clean Tech, Media, Biotech, and the Internet, in that order:
Those also happen to be the sectors they think will become the most overvalued:
Will that stop them from investing? Nah. VCs are particularly optimistic about their own abilities to deliver superior returns:
. . . even though more than half think the overall economy is headed for a downturn:
Not to mention that the five-year rate of return for all VC funds, as measured by the NVCA, is 3 percent, which is less than that of the S&P 500.
What else do VCs know?
—On average, they think they will invest $27 billion in startups next year.
—They are bearish on semiconductors and software. A full 59 percent believe that the IPO market will continue to recover.
—More than half (55 percent) expect M&A deals to increase in volume, but only about a third (35 percent) expect those deals to increase in value.
—An overwhelming 84 percent believe that new VC funds will raise the same amount of money or more than current funds, while 59 percent expect the number of VC firms to decrease. So more money will go to fewer firms, essentially.
—And 39 percent think that Hillary Clinton will be elected president, nearly twice as many as those who predict Guiliani will win:
Ah, conventional wisdom.
I think Hillary Clinton will like this post
I almost want to start a clean tech site now and put search on the side. Not for any other reason than it’s 100% sure to be bought if it’s any good thanks to this.
VCs only need to know one thing, invest in 10 companies, the odds are that one will become a jewel worth 10x+ with half going under and the rest being so-so. VC is essentially gambling but the stakes are higher and more “fun” then simply going to a casino.
I look forward to joining their ranks, sounds like a fun game!
Jon
Cleantech looks big, and rightfully so…
but i don’t think it’ll experience the growth % of internet companies
That blue hurts! These VCs sure know nothing about design.
Q. What do VCs know?
A. Nothing, in most cases.
Entrepreneurs are visionaries and build companies, not VCs.
Not to mention that the five-year rate of return for all VC funds, as measured by the NVCA, is 3 percent, which is less than that of the S&P 500.
Answer: Lots of jokers in the industry. If you’re not Kleiner, Sequoia, Draper, Founders Fund, Emergence, Khosla, Sigma, Index, SoftTech or Sherpalo you should start updating your resume because you stink. Jokers include NEA, Mayfield, Hummer among others.
—They are bearish on semiconductors and software. A full 59 percent believe that the IPO market will continue to recover.
Answer: There is a new model called Software as a Service. Maybe you should look into it, as it is disruptive by nature. Then again show me two VC’s that have hands on operating experience in this field.
—An overwhelming 84 percent believe that new VC funds will raise the same amount of money or more than current funds, while 59 percent expect the number of VC firms to decrease. So more money will go to fewer firms, essentially.
Answer: VC’s are opportunists. There is a nuclear winter coming for VC’s and they should squirrel away money because there model own model is now flawed.
Point #2: Why on God’s earth are they increasing the size of their funds these days when it only takes 6 figures to start a company unlike a few years ago when it took millions….. oh, I forgot. 2.5% management fee on another $100M equals $2.5 million per year in fees.
Conclusion: They always work in a herd mentality and most can not outperform what a money market account at eTrade is yielding.
The purse holders and their views are an important part of start up culture. Good article. Keep em coming.
so let me get this straight VC’s think that the markets they have targeted will be hot, they think though that they will become overvalued, but that they as individual VC’s will be better performers than their VC or other competitors, oh and they have the 3% track record to prove it, hmmm, someone seems to think very highly of themselves …..
Wow, I really hope they’re wrong about the presidential thing.
And if you asked Hitler if the Nazi’s would still be victorious, he would say “Yes.” And if you asked every Super Bowl loser if they we’re going to win, they would say “Yes.” Of course these guys are going to be bullish on the sectors they invest in. What else would you expect? C’mon, how about some real news… please?
Chris R,
we missed you
@12, lol - speak for yourself
You know what will be big in 2008?
Shoes!
Everyone has feet!
http://fakephilknight.blogspot.com
yeah Hillary won’t win.
- Clean tech - sounds about right /
- Although - Technology companies really don’t need as much VC money as they used to
.rb
so they are saying:
they are the ends to their means
and
their means to their own ends
they are right
and
they are wrong at same time
what goes around
comes around
have their cake
and eat it too
you are what you eat….
@12: Tell us more about your Amazon interview!
Sincerely,
Angela Hayden
ART GODDEESSSSSSSSSS
No comments here on U.S economy?
61% of this “rich lot” (they have millions) believe that our economy is going to decline in 2008.
Shouldn’t that be worrisome?!
@7 Sigma+ ?? ha… that must be the one you are affiliated with !
… Not as much as me!
fakesteveballmer.blogspot.com
Great presentation background!
looks like some very dark days ahead for the US of A.
Great stats, although it is true they are worrisome “for some”.
go long on healthcare stocks… Hillary is coming.
The US does not have a healthcare problem. The US has a “health” problem.
Where did Bill met Hillary before they became “Hillbillary”? On campus, they were both dating the same girl.
Imrpove?
I’m begining to think that everything about VCs is basic common sense.
That is obvious from graph’s colors:
green/yellow/red means +/-/=
green/blue/red means =/+/-
Very consistent…
The numbers are interesting thou.
Holy crap! Useful article, yes. However, it’s usefulness is to point out that venture capitalists (collectively) are just as deluded and irrational as the general population.
Don’t even get me started on the 16% that believe Obama will be sworn in as President of the United States. Don’t get me wrong, I have nothing against the man. I’m just saying there are some very, very, very long odds against him becoming President.
Well, I think we can safely say that VCs don’t know how to spell improve.
It’s in the US economy slide.
Obama can still make it.
?
Yay, absolutely 0 comments about Ron Paul not being on the list =)
I can’t wait for the election to be over (no matter who wins… as long as it’s a democrat) for the sole reason that I will never hear his name again.
VCs are scumbags.
Apparently VCs know really how to make seizure-inducing PowerPoint slides.
Funny, are VCs going to invest in politics? lol:)
Thanks Patrick Grote….
was wondering if anyone would comment