With venture capitalists voicing both optimism and pessimism regarding what the financial mess we're in means for investing and their portfolio companies, it seems fitting that about half of VCs queried by a new survey said that the current economic woes will have a worse impact on the tech industry than the meltdown of 2000.
Law firm DLA Piper conducted the survey, which posed a variety of questions to tech VCs and company execs.
When asked about the current crisis versus the burst bubble, technology executives were significantly more sanguine. Only 32% said they believed the impact of today's woes will eclipse what happened at the beginning of this decade. The report's authors mused that the current crisis has more of a collateral impact on these companies than did the direct effects of the tech meltdown. Yet they also argue that the full force of today's problems might not have come home to roost yet. Customers next year might not have as much money to spend on technology purchases, for instance. VCs are more obsessed with exits, and the lack thereof is what's getting them all down in the mouth, the DLA report surmises.
"VCs focus more on the markets and economic returns, and companies focus more on their specific business; the impact of the financial crisis may be more severe on exit opportunities than exit results for many companies," the report says.
Some other interesting findings:
- A majority (55%) of respondents said the IPO market would not begin to rebound until 2010 or later.
- Sixty-six percent of those surveyed said they have seen a decrease in customer spending and are lowering revenue forecasts.
- Seventy-five percent said they were adversely affected by the slowdown.
DLA Piper did not say how many people responded to the survey, which was e-mailed between late September and early October. The law firm said 37% of respondents identified themselves as CEOs, presidents and managing directors. Forty-four percent work for companies with fewer than 1,000 employees, while 28% work for companies with 5,000 to 10,000 workers. - Olaf de Senerpont Domis
Download PDF of the DLA Piper here
See Oct. 15 post on VC pessimism from Tech Confidential
See Oct. 10 post on VC optimism from Tech Confidential
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