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VCs Predict Money Will Keep Rolling in 2008

The annual survey of venture capitalists by National Venture Capitalists Association is out and VCs are predicting moderate growth in the worldwide venture capital market in 2008. They also forecast fewer venture capital firms, larger funds, and continued recovery of the IPO market.

p>The survey of 170 US venture capitalists concluded that clean tech would be the area that sees the most growth next year. However, a majority (55%) see there being a growth in investments in Internet specific companies — 21% see a decline in investments to the software industry, though. What about about Internet specific software companies?

Research firm IDC sees the software as a services sector growing 32% annually over the next few years. So, it seems likely that VC investment in cloud computing startups and software startups delivering products over the web as a service will also grow.

Overall, VCs peg the entire venture capital market at $20 billion to $29 billion in 2008 — putting it on par with 2007 levels. The majority of those polled also see the IPO market strengthening as well, and mergers and acquisitions increasing, though they are split as to the value of those deals.

If the VCs are right, bad news for the US economy: 60% say it will be on the decline in 2008, even though most think the sub-prime mortgage meltdown will be contained. The next president? If VCs have their way, there will be another Clinton in the White House come January 2009. But maybe we should take VC predictions with a grain of salt.

Along with the survey, the NVCA distributed some prognostications from top VCs, including Patrick Ennis, from ARCH Venture Partners, who demonstrated his love of alliteration by predicting, “In 2008 we will experience another strong year for venture funded startups. Never believe the
negative predictions from professional prognosticators of pervasive pessimism – they sound like
a broken record. The benefits of technology continue to spread through all aspects of the
economy and around the world, across many sectors such as biotechnology, materials science,
advanced computing, telecommunications and energy technologies.”

That sounds like great news for tech companies, but John Cook reminds us that last January Ennis also made some predictions, including this one, “”The new Apple iPhone will be a flop.” Oops.

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