The Washington Technology Industry Association (WTIA) released its quarterly report on venture capital in the state Monday, saying that the venture capitalists surveyed by the group are "cautiously optimistic" in their outlook for the industry. According to the group's Q3 2010 Venture Capital Outlook Survey, the economy continues to be the number one concern of Washington's venture capital community, with a majority of Vcs predicting quality of new deal flow, the quality of deals expected to close, their confidence in the quantity of deal flow, and valuations for new early-stage deals will remain the same as Q2.
Among other findings in the report, the WTIA said that firms are now looking towards making Series C-round investments, the first time since 2009; that VCs are expecting their portfolio companies to "keep a tight lid" on costs; and that--depiste continuing to fund their portfolio firms--very few of those firms are expecting to hire. In fact, in terms of hiring, the survey found that 88 percent of participants expected their portfolio companies' workforces would "remain level", 12 percent were "not sure", but that none were predicting layoffs.
"I think investors are still worried about macro factors like unemployment, health care costs, and upcoming tax increases," according to Greg Gottesman, Managing Director at Madrona Venture Group, in a statement from the WTIA, though he voiced optimism in M&A activity and an increase in areas such as enterprise IT spending and mobile.