Measuring VC Sentiment

mark cannice

Prof. Mark V. Cannice

It was disappointing to miss the Dublin Web Summit during the week and to gauge the sentiment among local tech entrepreneurs and venture capitalists (VCs).

However, I was doing something much more hands-on at San Francisco University’s Silicon Valley Immersion as part of DIT’s MBA Program. During the course, Prof. Mark Cannice spoke of two quarterly VC indexes he devised and now maintains. He started the first, the Silicon Valley Venture Capital Confidence Index in 2004, and established the China VC Confidence Index with Ling Ding a little over a year later.

Cannice’s indexes measure and report “the opinions of venture capitalists in their estimation of the high-growth venture entrepreneurial environment” in the San Francisco Bay Area and in China for the coming 6-18 months. In addition to putting a number on the confidence levels, the quarterly reports feature a broad selection of VC interviews some on and off the record. He polls 37 VCs in the Bay Area and 16 in China.

Q3’s Silicon Valley index is showing an increase after an abrupt drop in Q2. Some of the factors behind the confidence include increasing exit opportunities and the emergence of new market sectors. Tim Chang of Northwest Venture Partners told Cannice, “There are many areas of innovation and opportunity associated with the rise of smartphone platforms, the use of game mechanics to re-invigorate user experience, and monetization across various industries, and also the shift towards cloud services.”

Angel investor, Bob Bozeman of Eastlake Ventures, saw, “Improved confidence by funding organizations to fund where quality shows its face.” Bozeman, who was one of the early investors in Google, was a guest speaker during one of Cannice’s lectures.

“Talented entrepreneurs are able to scale their businesses quickly and capital efficiently, fueled by aggressive, cash-rich, product-poor by big corporates becoming increasingly acquisitive,” Jeb Miller of Jafco Ventures told Cannice.

Other factors behind the Q3 rise in confidence were the macro-economic climate in the U.S. and an improvement in corporate financials. However, investors see sectoral weaknesses, particularly in health care. Even as the general economy improved, Christian Cortis of ATV Capital said, “Regulatory challenges and acquirer consolidation remain headwinds that impede a stronger recovery.”

Someone in the group asked Cannice if he did a similar index for Europe. He said he does not have time. Perhaps there is an opportunity on this side of the Atlantic to partner with Cannice or devise a similar index?

Some comments from VCs at the last Dublin Web Summit can be found here.

Image of Mark Cannice courtesy of BPSUSF on Flickr.

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  1. Pingback: John P. Muldoon » Money for Nothing (Apart from a Great Idea and Some Work)

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