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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

February 13, 2008 at 9:44 AM

WTIA: State VCs expect nine acquisitions, one IPO in Q1

The newly named Washington Technology Industry Association, formerly known as WSA, released its inaugural venture capital outlook survey today, and found financiers have “cautious optimism” about deal quantity and quality but ongoing concerns about finding talented executives.

Highlights from the study, which was sponsored by Ernst & Young and Perkins Coie:

On the economy:

“The biggest challenge for the investment environment in the first quarter appears to be the deteriorating public markets and the outlook for the overall economy which could affect follow-on financing rounds and

company exits.”

On valuations:

“Survey results indicate that existing portfolio companies will continue to see positive revenue and employment growth for the first quarter. 50 percent of the respondents state revenue growth will be moderately better than the fourth quarter of 2007; and 88 percent indicated a workforce growth of more than 10 percent.”

On exits in Q1:

“In terms of portfolio-company exits, one company of all respondents was expected to IPO this quarter; and nine companies were projected to be acquired. 71 percent responded that their portfolio companies would not be off-shoring any significant business functions.”

On new investments in Q1:

“75 percent of the respondents indicate they will be making one to two new investments in the first quarter,

with the number of follow-on investments ranging from zero to five for each firm. A majority of the new

investments are considered “A” round and are in the $3 to $6 Million range. Respondents expect that every

investment will include an out-of-state, co-investor; and a majority will co-invest with an in-state VC.”

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