The Silicon Valley Venture Capitalist Confidence Index™ produced by Professor Mark Cannice at the University of San Francisco reported on Nov. 1st that the confidence level of Silicon Valley venture capitalists was 3.53 on a 5-point scale in 3Q12, a small increase from the 3.47 reported in 2Q12.
Venture capitalists expressed concern about high valuations, macro economic uncertainty and life science funding, but were upbeat on the mobile, cloud and payment industries, and the availability of strategic acquirers with cash.
Excerpts: "Square’s recent venture funding round of $200 million at a valuation of $3.25 Bn is a good barometer, with Starbucks among the investors" (Igor Sill, Geneva Venture Management)
In healthcare, Joe Mandato of De Novo Ventures noted a “continued need to conserve capital for follow on investments, and a higher bar for new investments.”
S.F. Gate noted that SV is facing growing competition coming from New York( "The Silicon Alley") , London ("Silicon Roundabout") and perhaps the most ambitious program is "Start-up Chile". Start-Up Chile, a program created by the Chilean Government "intends to bootstrap 1000 entrepreneurs by 2014 by giving each $40,000 of equity-free seed capital, and a temporary 1-year visa in Chile to develop their projects for six months". Apple Co-founder Steve Wozniak is quoted as saying ""I think it's the greatest program of its type in the world".
S. V. Investments
PwC/NVCA MoneyTree™ Report based on data from Thomson Reuters reported that $6.5 billion was invested in 890 deals in 3Q12, a 7.1% decrease in dollars and a 1% decrease in transactions from the $7.0 billion raised in 898 deals in 2Q12 (as reported in July 2012).
The MoneyTree Report also indicated that venture investing in 2012 is on track to be below 2011 amounts in both dollars and deal volume, and that seed stage venture investing was especially weak.
The MoneyTree Report also reported that software and internet/digital media investing remained strong in 3Q12 at $2.1 billion, but both industries declined in dollar terms from 2Q12 amounts.
Mark Heesen, NVCA President: “Information technology investment continues to be very strong, particularly in the Internet arena while life sciences investment remains low, reflecting ongoing concerns regarding regulatory uncertainty, capital intensity and investment time horizons in the space.
Life science investing, led by follow-on biotech financing, increased in dollar terms from 2Q12, but is down 19% year-to-date compared to the first nine months of 2011.
Cleantech investing declined 20% in dollars compared to 2Q12, but saw an increase in the number of deals as investing in this sector appears to be shifting to smaller, less capital intensive deals.
Chilecon Valley has its own set of issues, namely the Chilean government's anti-business mindset and regulatory mess. The Economist had an interesting piece on it a few weeks back.
Personally, I think that you can make a Silicon Valley type knockoff just about anywhere if your focus is on web apps (consumer or enterprise), assuming the government . But, if you're looking to startup a life sciences or tech hardware business, it helps to be in the heart of the valley or places like the Pacific Northwest where all the players are.
I don't understand your rationale. The whole point of being in the Bay Area is to connect with investors on Sand Hill Road. High burn rates (yes, even in a SaaS company) require additional cash that cannot be secured without relationships; relationships cannot be cultivated without face-to-face meetings.
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