VCs optimistic, but expect to cut back

A majority of venture capitalists are cutting back on the number of investments they have, but many remain optimistic in the long term, an industry group reported last week.

The National Venture Capital Association, working with Deloitte Touche Tohmatsu, said that 51% of 725 venture capitalists they surveyed are decreasing the number of companies they plan to invest in. By contrast, only 13% are making an increase.

At the same time, many remained optimistic about the future.

More than half said that now is a good time to invest in new companies, and nearly half said they believed their future investments would be larger than now.

“Going around the country, I hear venture capitalists, by and large, think we have hit bottom and will be making our way out of this year,” said Mark Heesen, president of the NVCA. He spoke in a telephone interview with reporters.

The 2009 Global Venture Capital Survey was conducted in the first quarter of the year.

The survey of venture capitalists worldwide found that many of those polled are looking to increase investments in what they see as growth fields.

Six in 10 plan to increase their investments in cleantech over the next three years and more than one-third plan to increase their investments in medical devices.

About one in four will increase their investments in new media, consumer business and bio pharma. About one in five will increase investment in software.

The survey also confirmed venture capitalists have backed away from new startups during the recession.

“Thirty-six percent of the respondents surveyed intend to move toward later stage investing” to support their existing companies, the survey found.

Of those surveyed, 44% were from the United States, 16% from Asia Pacific countries, 21% from continental Europe, 10% from the Americas outside the United States, 2% percent from Israel and 7% percent from Britain.

More than one-third were from firms with between $100 million and $499 million under management.Other highlights from the survey:• In the United States, 52% of respondents expect the number of limited partner investors from foreign countries will increase.• Half of all those surveyed say they believe that VC investment will increase in Asia.

—David Lawsky, Reuters