Half of VCs expect investment to remain restrictive over next 12 months

Just over 45 per cent believe there will be no change in the restriction on investments and just 6.8 per cent expect deals to be less restrictive over the next 12 months.

While deal volume may remain low, 70.5 per cent of firms surveyed agree that demand from young companies for venture capital will grow.

Dr John Paglia, an associate professor of finance at Pepperdine University’s Graziadio School of Business and Management, said, “Results from our study suggest that the venture capital community is vulnerable to the same pressures and constraints as other segments of the public and private lending industry. The long road out of the current recession and tepid marketplace has made it easier to simply keep money locked up.”

Findings on the venture capital industry also shows that investing in cleantech companies is now more popular than software and medical devices. Venture capitalists report investing the largest concentration of money in cleantech (14.5 per cent) followed by software (13.5 per cent), medical devices (12.2 per cent) and biotech (9.8 per cent). More than 35 per cent of investments are expected to be in California.

Few venture capital providers (41 per cent) have plans for raising funds in the next year, they have high expectations for return on investment, and they are taking smaller stakes in investments.

A majority of venture equity investments are for minority stakes in companies. Approximately 40.3 per cent report taking equity stakes in the range of 20 to 49 per cent, while another 49.1 per cent indicate less than 20 per cent.

Get the full report by Pepperdine University’s Graziadio School of Business and Management

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