If the credit crisis and Wall Street implosion haven’t made it obvious, take it from the VCs themselves: expect fewer startups to get off the ground next year. According to stats from the third National Venture Capital Association (NVCA) Predictions Survey, VC firms won’t have much extra time or money to invest in newer companies in 2009: 60 percent of respondents said there will be fewer seed rounds and 64 percent said there will be a decline in early stage funding next year. On the bright side, about half of the VCs surveyed said late stage funding would actually rise. More after the jump.
— Internet, media and entertainment to be hit: 58 percent of VCs expect investment in web-based companies to decline, while 71 percent said that the media and entertainment space would receive much less funding next year.
— Less funding overall: Nearly all of the respondents predicted VC funding to slow overall in 2009, and about 61 percent said the decline will be greater than 10 percent (compared to spending in 2008). But it may not be because they don’t want to invest, it will be because their firms can’t secure more capital themselves: 96 percent of VCs said they expect an increased number of firms to fail to raise money next year, and 85 percent said they think institutional investors will cut back on their commitments to the VC class.
— Is there a bright side?: Yes, and it’s that 72 percent of VCs are pegging the VC-backed IPO market to rebound by 2010. About 18 percent of the respondents actually think the upswing could come as soon as Q409.
The NVCA questioned more than 400 venture capitalists across various U.S. industries in late November/early December for the survey.