Study: Venture capital climate to stabilize

Venture capitalists surveyed by the consulting firm Deloitte & Touche say that the technology investment climate will stabilize over the next six months, resulting in more investment activity.

More than 2000 East Coast and Silicon Valley venture-capital executives managing funds in excess of $50 million indicated that venture capitalists have adjusted their models and appear to be adopting a more traditional, disciplined approach to their investing, according to Graham Watson, managing director.

“Nearly 90% of the survey respondents believe that now is a good time to be investing in the technology sector,” Watson said in a statement.

The study indicated that new investment activity might rise, as 41% of respondents said they expect to spend the majority of their time on new investments, rather than “sick portfolio” companies.

However, the news was not all good. Almost three of every four respondents expect “down rounds” to continue, as well as the high mortality rate among troubled venture capital-backed companies. In addition, 78% of respondents said they expect 10% to 33% of all venture-capital firms to fail during the next six months.

--Glenn Bischoff, senior writer