Results of the 3Q Silicon Valley Venture Capitalist Confidence Index

Read the interpretation of the steady results revealed in University of San Francisco associate professor of entrepreneurship Mark Cannice’s quarterly study of nearly 40 Silicon Valley VCs byTechCrunch writer Sarah Lacey in “Venture Capital’s 3Q Temperature” .

On a scale of 0 to 5, VCs view the current climate for investing and economic recovery to be 3.37. This is the same figure Cannice derived in 2Q ‘09. The good news is VCs still feel there are a lot of good new companies out there, and they know that to make returns ten years from now, they have to keep the dollars flowing now.

But there’s a downside that keeps the score stagnant from 2Q to 3Q ‘09. According to Lacey, “if VCs can’t spin mature companies off to buyers or public market investors, they have to keep more reserves for them that can’t go to new deals. And without those exits—some firms may not be able to raise their next funds, which also hurts their ability to do new deals.” (Read more)

Note: To read the 3Q Silicon Valley Venture Capitalist Confidence Index in full, click here.

The State of Funding in the Valley

Angel investor Ron Conway’s name came up a few times in our Funding Business Forum at the ANZA Gateway to the US Summit this morning. It wouldn’t be a funding panel in Silicon Valley without a little name dropping and on the back of that we came across this interview with “the Grandaddy of Silicon Valley,” bv Mike Arrington at TechCrunch that took place just the other day.

Conway was asked what he thought of the state of funding in the Valley, one year after the global financial crisis (GFC) struck the tech hub, as well as the rest of the world.  Said Conway,

“We’ve seen an explosion of real time data startups which has helped offset the downturn in Silicon Valley. We still see 5-6 deals a day, which tells me the market is very vibrant. I feel like we’ve weathered the storm very nicely. Also, a lot of companies that needed money last year raised money quickly or cut costs and survived, so we had a lower failure rate than we thought we would.”

(Read more)

More Signs That Point to Economic Turnaround for Silicon Valley’s Tech Firms

BusinessWeek notices a trend in Silicon Valley that may signal what two-thirds of senior technology executives already believe, the US tech sector, with its hub in Silicon Valley, will fully recover from the current economic crisis ahead of the overall US economy. A story by Rachael King reports that, “pockets of the industry are adding workers en masse,” particularly “in such fields as cloud computing, computer security, business analytics, and IT services for government and health-care providers.”

Even some companies hit hard by recession are slowly reopening their doors to new employees amid signs that the tech sector may rebound before other areas of the economy. “We’re hiring people while we can before the economy swings back and the best tech employees will be hard to find,” says Don Vaccaro, CEO of TicketNetwork. Vacarro says the 220-person company is bulking up now in anticipation of demand six months from now.

(Read more)

Immigrants to the US Don’t Take American Jobs, They Create Them

According to a guest piece in yesterday’s TechCrunch by Vivek Wadhwa, immigrant workers in the US on H1B visas (those issued to highly skilled professionals) would create a lot more American jobs if the government would reduce restrictions on this visa class.

Consider for a moment that between 1995-2005, one-quarter of all technology and engineering startups in the US were created by immigrants; 52% of the companies in Silicon Valley were founded by non-US born workers. These so-called “immigrant-founded” companies employed 450,000 workers in the US in 2005. In 2006, more than 25% of US global patents had foreign-born authors.

The US only makes 60,000 H1B visas available each year. For years, US employers, especially those in the high-tech industry have been asking the government to increase this limit — not to take jobs away from Americans, but rather to fill positions with qualified individuals. Additionally, foreign workers on the H1B visa must wait years for that visa to turn over into a green card (permanent residence). During that time talented workers remain in jobs that they may actually become overqualified for or they grow frustrated and return home, becoming “unwilling competitors” to the US companies that trained them.

Typically, workers with an H1B visa cannot start a new business in America. The TechCrunch piece argues that they should be able to because their startups would create more new American jobs. These immigrants could be rewarded for their efforts to boost the US economy with a faster track to a green card, and thus free up H1B visa slots for a new pool of talented foreign workers that could continue to help the US economy recover and prosper. (Read more)

Good News across Silicon Valley’s Diverse Entrepeneurial Community

There’s a venture capital revival happening across Silicon Valley’s diverse entrepreneurial community. That’s good news for companies not only looking to raise funds, but also those looking to enter the US market and grow organically or through other means. It’s a sign that the US economy is looking up in general with numerous industry sectors in play. San Jose Mercury News reporter Scott Duke Harris cites recent investments in pharmaceuticals, desktop virtualization, security, online publishing, smartphones and more in “Venture Capital Revival for Valley Entrepreneurs”. (Read more)