We didn’t think the venture capital and startup communities could become more pessimistic than they were last year – but we were wrong.  Normally known for their optimism, VCs and CEOs of venture-backed startups were loathe to predict upswings in investment levels, fundraising, IPOs and the economy for 2012 – and they were right.  So it stands to reason that the realism that permeated last year’s predictions would carry over into this year.  Even fewer respondents to our 2013 VentureView Predictions survey see more of anything in the coming year.  Consider the following:

• Last year 48 percent of VCs thought IPO volume would improve; this year 40 percent expect more IPOs
• Last year 32 percent of VCs though venture investment would increase; this year 27 percent see more investment next year.
• Last year 27 percent of VCs thought there would be an increase in firm fundraising;  this year just 14 percent see increases
• Last year 47 percent of VCs thought the economy would improve; this year this year only 42 percent think so.

The CEOs mirror these prediction trends – with 5-10% of respondents less bullish than in 2011.  So what is happening?

The timing of our survey should not go unnoticed.  Taken in the last week of November/first week of December, the reality of a dive over the fiscal cliff was front and center in the minds of many.  What drives the economy, drives the public markets, which drives VC fundraising, which drives investment… and so on.   What is abundantly clear to us at NVCA is that Washington politics can either prop up or wreak havoc on the venture capital market and nowhere is that more obvious than in these survey results – with one exception:  The Power and Enthusiasm of Startup Companies.

Our 2013 survey again predicts a large majority (83 percent) of venture-backed companies increasing headcount next year.  Seventy eight percent of CEOs surveyed expected their company valuation to increase. And 67 percent expect to increase their global activity.  It is this optimism that brings VCs to work each and every day.  Entrepreneurship and innovation always prevail.

One final note:  We must be careful not necessarily to equate “more” with “better”.  In some cases, less is better.  As the size of the venture industry continues to decrease, returns are poised to improve.  In some investment areas, we need to pull back the reins as we know full well that industry cannot scale to monumental levels and still perform in a manner that is acceptable to our limited partners.  So while, the overall predictions are for “less” in 2013, it might be the beginning of "better" for the foreseeable future.

You can see all of our predictions and data here:

Press Release Summary

Data Charts

VC Predictions

CEO Predictions