WTIA Venture Capitalist Outlook Survey for Q1 2010

Today, the Washington Technology Industry Association (WTIA) released the results of its Q1 2010 Venture Capital Outlook Survey.  According to the reprot, the Washington state venture capital (VC) community continues to express optimism for their portfolio companies’ growth in terms of revenue and hiring, in addition to an increased deal flow.

The WTIA queries top VC firms statewide about indicators for the coming quarter and insights on topics such as deal quality, deal quantity, expected exits and various business metrics for their portfolio companies. Results are compared to previous quarters. Key highlights from the Q1 2010 survey include:

• Confidence in deal flow quantities increase. Sixty percent of respondents predict new deal flow quantity to be moderately higher with another ten percent predicting a substantially higher volume. Sixty percent of respondents report a moderately higher confidence in quantity of deal flow expected to close compared to only 33 percent last quarter.

• Portfolio company revenue growth up. Ninety-one percent of respondents predict revenue growth for portfolio companies with 82 percent reporting “moderately better” and nine percent reporting “substantially better.”

• Companies increase workforces, reduce layoffs. Twenty-seven percent of respondents predict their portfolio companies will increase their workforce by more than ten percent, making this the most optimistic prediction since the third quarter of 2008. Additionally, layoff predictions are down for the third straight quarter with only nine percent predicting their portfolio companies will decrease their workforce by ten percent.

• Average size of new investment rounds is predicted to increase. Sixty percent of respondents predict their new investments in Q1 will be in the $3-6 million value range compared to 44 percent who were investing at the same deal size last quarter. Additionally, ten percent are reported to be in the $6-10 million value range.

Looks like the Venture Capital industry is significantly more optimistic than this time last year.