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)

Milestones to Reach for before Raising Venture Capital, if You Need Venture Capital at All

by Viki Forrest, CEO ANZA Technology Network

I’ve just returned from running our annual Gateway to the US Focus Workshops in Australia. I saw some good, first-rate companies that are ready to explore their potential in the US market. We’ll be talking more about them as they prepare to attend our Summit next month, but right now, as they start to work with their coaches in preparation for their US trip, I’m reminded how much their focus tends to be toward raising venture capital at this stage in their planning. Every year, our US-based coaches must work with the CEOs of these companies to deflect the idea that coming to the US is only about getting funded.

I was reminded about this in a Venture Beat story I saw the other day, “5 Milestones to Reach before Raising Venture Capital” – these are:

1. When you don’t need the money
2. When you have a product
3. When you know your customer better than anyone
4. When you have traction
5. When you know what you’re getting yourself into

This is all great advice that you can read here. But I’d like to add a #6 to this list – not every company needs venture capital. Depending on which VC you talk to, in which country, about 1 in 1,000 pitches to VCs get funded. That’s 0.1%!

What does that mean? The vast majority of successful companies are built on customer sales. This is the major focus of ANZA’s programs.

But guess what? An analysis of companies that have come through the ANZA TechNet Fast Track program (the next step after the Gateway) reveals that 3% of those companies have been funded to date. That’s a track record we’re extremely proud of. Why have those companies gotten funded? Because they have worked in the Fast Track program to focus on getting customer sales!

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)

Ten Unconventional Wisdoms for Funding Start-ups

Dean Takahashi of Venture Beat has compiled serial entrepreneur Naval Ravikant’s “10 Unconventional Wisdoms for Funding Start-ups” from his keynote at the Finance4Founders dinner in San Francisco last month. Among the top 10 are:

1. Valuation is temporary, control is forever.

2. The less you raise, the more it matters.

3. If you want advice, ask for money.

To read the rest of this engaging list, and explanations for each, click here.