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Report: VCs to cut back on IC investments in 2010

Posted: 18 Dec 2009 ?? ?Print Version ?Bookmark and Share

Keywords:VC investment? semiconductor industry? clean technology?

While Venture capitalists are "cautiously optimistic" about 2010, there's more gloomy news for the semiconductor sector.

Clean technology and other sectors remain hot for VCs. The semiconductor industry is the sector in which most VCs believe there will be a decrease next year, according to Venture View 2010, the annual predictions survey conducted by the National Venture Capital Association (NVCA).

Sixty-four percent predict lower investment levels in 2010. Many venture capitalists believe that the wireless sector will experience declines with 37 percent predicting lower levels for next year as well, according to the survey.

The overall venture industry will begin to see gradual increases in investment levels and exit transactions in 2010, but the asset class will continue to shrink in size over the next five years, according to Venture View 2010.

The NVCA survey was conducted from Nov. 30 to Dec. 8 and includes responses from more than 325 venture capitalists across the United States.

Clean technology is the industry where most VCs predict growth with 54 percent forecasting higher investment levels in 2010, according to the survey. Others include Internet (46 percent predicting higher investment levels), media and entertainment (33 percent) and software (32 percent). In medical devices, 38 percent expect investment levels to stay the same while roughly one-third each predict levels to increase or decrease.

According to a new report from PricewaterhouseCoopers LLP (PwC), venture capital investing in the cleantech sector rebounded sharply in the third quarter of 2009 to $898 million in 57 deals, rising considerably from $475 million in 49 deals in Q2.

In the NVCA survey, a majority of respondents believe that there will be more investment in Asia with 70 percent of VCs anticipating growth in China-based investments and 58 percent seeing greater investment levels in India in 2010.

On the exit market front, most VCs predict a mild improvement in the number of venture-backed IPOs in 2010. Seventy-four percent of the respondents believe there will be more than 20 IPOs next year with the average forecasted IPO volume at 26.3 offerings. Only 10 percent of VCs predict more than 50 IPOs.

More VCs are optimistic about the acquisitions market with 91 percent believing the number of deals will increase and 63 percent of respondents predicting the value of those deals will be higher.

- Mark LaPedus
EE Times

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