US venture capitalists are forecasting a difficult 2009 for the country’s economy, the capital markets and the venture industry as the global financial crisis takes its toll on the entrepreneurial ecosystem. According to the respondents of the third annual National Venture Capital Association (NVCA) Predictions Survey, the coming year will be met with a slowdown in investing across most sectors and a continued weakened exit market. However, most venture capitalists surveyed predict a recovery in 2010 when the initial public offering (IPO) market is expected to re-open and those companies and venture firms that weathered the storm will emerge strongly.
"2009 will be a year of anticipation for the venture capital industry as the economic turmoil will engender a fair amount of Darwinian change,” said NVCA President Mark Heesen. “The recession and shuttered IPO market will place tremendous pressure on portfolio companies to tighten their belts and re-tool where necessary. We will likely see a marked slowdown of new investments as venture capitalists turn their attention to supporting these existing companies. That said, most venture capitalists will say that a down market is the best time to invest when valuations and competition are lower. There is no recession on innovation and great ideas will still get funded – especially in sectors that have more insulated demand such as clean technology and life sciences.”
