In a sign of the poor investing times, more than 60 percent of 200 venture capitalists say they doubt funding levels will increase before early 2002.
That echoes recent figures. Last year, venture investments dropped for three consecutive quarters, as of the fourth quarter. That's a trend that hasn't been seen for at least five years.
Only 1 percent of the venture capitalists surveyed by accounting-and-consulting giant Deloitte & Touche believed they would cash out of a company via an IPO. The vast majority of survey participants, 95 percent, said their most likely path for exiting an investment in a company was through a merger or acquisition, according to the survey released Friday.
"What's disappointing about these results is the venture capital community has played a pivotal role in driving the economy in California and the U.S.," said Kirsten Richter, a managing director with Deloitte & Touche. "So to the extent that those executives who are making investment decisions do not plan to increase their investments until 2002, that will have a significant impact on the economy."
But despite the anticipated slowdown, some tech sectors are expected to remain stable or increase. Network hardware and software, wireless and telecommunications, and enterprise-software companies are expected to continue attracting venture investments, according to the study.
New Edge Networks, a national broadband provider, is one such example. Earlier this week, the company announced it received a $40 million fourth round of funding from GS Capital Partners III, Crosspoint Venture Partners, Greylock and Accel Partners.
Internet-related companies, however, may not fare as well. Sixty-one percent of the respondents said Internet companies would receive less funding this year, according to the survey.