Who will be the next Medtronic? What will be Minnesota's next breakthrough industry? James Walsh will provide the latest information and commentary on the people, companies and trends driving innovation in Minnesota. From visionary entrepreneurs to game changing technologies, this blog offers a window into the future of Minnesota's economy.

Silicon Valley venture capitalists are feeling more confident

Posted by: under Minnesota entrepreneurs, Minnesota innovation, Minnesota technology Updated: January 28, 2011 - 12:01 PM

San Francisco Bay Area venture capital firms are feeling more confident about the high-growth entrepreneurial environment, according to the Silicon Valley Venture Capitalist Confidence Index released on Friday.

The index, which surveyed 35 Bay Area venture capitalists in December, said confidence among venture capitalists is up because there are more opportunities for firms to sell start-ups to larger companies and the market for IPOs is improving. New technologies in areas such as mobile Internet and cloud computing, has also helped, the index said.

The index increased in the fourth quarter to 3.75 on a 5 point scale, with a 5 indicating high confidence. That was up from 3.7 points in the third quarter of last year.

The index was created by Mark Cannice, a professor of entrepreneurship and innovation at the University of San Francisco School of Business and Professional Studies.

Many Minnesota venture capitalists echoed similar sentiments and some said they plan to place more money in new investments in 2011.

But how much of those investments will be placed in Minnesota remains to be seen. Venture capital investments in Minnesota fell 48 percent to $139.5 million in 2010, the lowest in 15 years of record keeping, according to the MoneyTree Report

"I'm personally more bullish on opportunities and exits coming out of China right now than the U.S.," said Tim Chang of Norwest Venture Partners in Friday's index report. "There, we will see $1 billion plus category leaders created across the board."

Chang said in Silicon Valley he believes there will be a mostly "flip meat style feature-oriented start-ups better suited" for angel investors with smaller mergers and acquisitions.

Meanwhile, some Bay Area venture capitalists said the life sciences sector still remains challenged. About 64 percent of the venture capital investment in Minnesota in 2010 went to medical device start-ups.

"The market for early stage life sciences investment remains soft due to continued concerns on regulatory uncertainty and long term capital needs relative to potential exit timelines," said Joe Mandato of De Novo Ventures in the index report.

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