That’s, uh, pretty overwhelming. Things are a little more divided when it comes to the size of the contraction, but even then, 58 percent of respondents agreed that the industry will shrink 16 – 30 percent. That doesn’t necessarily mean we will see big layoffs — 63 percent of respondents said the number of investment professionals at their firm will stay the same. Instead, NVCA President Mark Heesen predicts that it will be a gradual process, as fewer firms raise funds, and as those funds shrink (87 percent predicted that venture funds raised next year will be smaller). That means fewer firms, and smaller ones.
Not that it’s all doom and gloom. VCs see hope, for example, in an improving market for exits, especially acquisitions, with 91 percent predicting that there will be more acquisitions next year. They also predicted a small increase in initial public offerings, with 43.3 percent estimating that between 20 and 29 venture-backed companies will go public.
“The IPO market for VC-backed companies will finally reopen in the US, and several IPOs will reach $1 billion market capitalizations or more,” said Pascal Levensohn of Levensohn Venture Partners (some respondents let NVCA quote their answers).
And if you’re a startup, VCs see some good news too. Venture capital investments will increase slightly next year, according to 44 percent of respondents, and 49 percent said their firm will invest in more companies. The biggest predicted investment increase is in cleantech, and the smallest is in software.
325 United States-based VCs participated in the survey.