Confidence survey suggests diminishing gloom

Figures from this quarter’s Private Equity Confidence Survey, which is conducted by Deloitte & Touche Corporate Finance among 770 venture capitalists as a barometer of market sentiment, suggest diminishing pessimism about the economic climate among venture capitalists. However, the fact that the number of correspondents expecting an improvement remains stable at 5% and those expecting a downturn fell from 60% to 55% indicates that it is more a case of VCs foreseeing less gloom than anticipating a brighter outlook. This is backed by the survey’s finding that, for the first time since Q1 1999, more VCs are expecting a decline in the performance of portfolio companies (29%) than expect an improvement (21%); concomitantly, for those now looking to invest funds, a majority (56%) still believe it is too early to invest in business sectors hit by the down-turn, compared to 43% who think that now is a good time to invest.

On a more positive note, the number of correspondents who expect the economic climate to make fundraising more difficult has fallen from 73% to 70% since last quarter’s survey.

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