In his quarterly study, Mark Cannice, Professor at the University of San Francisco, shows that the level of confidence of Silicon Valley’s venture capital firms has declined for the second quarter in a row. Measuring confidence via survey from more than two dozen investors on a scale form one to five, the current index shows a value of 3.73, down from 3.81 in the first quarter of 2015. Aiming to measure investors’ expectations for the next year and a half, the index scored a high of 4.38 in the first quarter of 2007 and a low of 2.77 in the second quarter of 2008.
“While the powerful ecosystem in Silicon Valley for venture creation, innovation, and long-term value creation continues to grow stronger, short to medium-term prospects for positive investment results appear somewhat less certain,” Dr. Cannice wrote. This uncertainty is coming from “the entry of new types of investors, the rising cost of doing business in Silicon Valley and the potential fallout of macro environment issues (e.g., China, E.U.).”
Despite higher uncertainty, venture capital flows into young companies. According to the National Venture Capital Association, $17.5 billion were invested by VCs into US start-ups during the second quarter. According to Dow Jones VentureSource, it were even $19.19 billion.