A survey of more than 600 venture capitalists and CEOs reveals limited optimism about the coming year, with business IT and healthcare expected to win increased backing at the expense of the medical device industry.
The survey, conducted by the National Venture Capital Assn. and Dow Jones VentureSource, showed that 53% of respondents expect lower VC investment in medical device startups. Forty-; 49% predicted the medtech space will be underfunded.
"While anecdotally we have been hearing about ‘light at the end of the tunnel’ from venture capitalists and CEOs alike, this year’s survey reminds us that we are not out of the woods yet," NVCA president Mark Heesen said in prepared remarks. "Ongoing uncertainty surrounding the fiscal cliff clearly impacted respondents’ outlooks for the coming year. The influence the federal government has over the growth or stagnation of our industry has never been greater. Lawmakers need to understand that their brinkmanship politics is hurting the entrepreneurial ecosystem, which has been grasping for positive news for the last four years. The potential for growth is palpable, with positive forecasts for startup jobs, technology innovation, and global activity. But to realize this promise we must get on the right track in Washington, and quickly."
More than ⅔ of CEOs polled said they plan to raise more cash in 2013, according to the survey. But terms of the deals are expected to favor VCs, with 65% of VCs and 56% of CEOs saying investors will have the upper hand and only 14% of CEOs and 6% of VCs expecting terms to favor entrepreneurs.
On the initial public offering front, VCs were decidedly more optimistic than their executive counterparts, with 40% of VCs said they expect the volume of IPOs to rise next year and 52% saying they expect IPO quality to improve. Among CEOs polled, just 29% of CEOs said they believe IPO volume will increase and 37% expect better overall quality. Half of the CEOs said they’d consider being acquired in 2013, with 7% open to going public next year.