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Venture capital pessimism Featured

12:49pm EDT February 26, 2002
Venture capitalists are pessimistic about the current financial market, but a bit more positive about the future, according to a survey of 80 venture capital firms conducted by Dee Power & Brian Hill of Profit Dynamics Inc.

Eighty-one percent of VCs surveyed rated the current environment as worse/much worse than the previous 12 months, citing the recession as the reason for the current environment. Eleven percent said it was about the same. Only 8 percent felt it had improved.

The VCs said they plan to focus on existing portfolios rather than investigate new companies. When asked about investing in new companies in the future, 55 percent believe the level of investing in early stage companies will decrease in the coming year; 45 percent felt it will increase or remain the same.

Profit Dynamic's Brian Hill says this is because a great deal of capital has already been raised and current portfolios will require less of it, leaving funds for new companies.