Study: Venture Capitalists, CEOs Optimistic About ’11

Most venture capitalists predict that venture firms will invest more in 2011, especially in IT companies.

A majority of venture capitalists have renewed optimism about the future and expect to see more investments in 2011, according to a survey conducted by the National Venture Capital Association (NVCA) and Dow Jones VentureSource.

The survey, called Venture View, collected responses from more than 330 venture capitalists (VCs) in the United States and 180 CEOs of venture-backed companies in the nation.

According to the survey, 51 percent of VCs expect venture capital investment to increase in 2011. The remaining VCs are split equally between expecting investment to decrease or to stay the same.

When asked about specific industries, more VCs expect investments to increase for IT companies more than in the life sciences and cleantech sectors, a “departure” from prior years, according to a press release from NVCA.

Other sectors in which VCs expect to see investment increases are consumer Internet and digital media, cloud computing, mobile and telecom, and health care IT.

However, VCs also say that the consumer internet and digital media and cloud computing industries are the most likely to see investment “froth,” a term used among the venture community to suggest over investment.

About 53 percent of VCs do not intend to invest in start-ups outside the United States next year, but a majority of those who do are looking to invest in companies in Asia.

Eighty-one percent of VCs and 82 percent of CEOs expect more acquisitions in 2011. More than half of both groups also expect IPO and acquisition quality to improve or remain steady in the coming year.

In terms of firm size, 70 percent of VCs believe small venture firms will have an advantage in 2011, but the CEOs that were surveyed were split on whether small (48 percent) or large (52 percent) VC firms will fare better.

As for the overall economy, 63 percent of VCs and 64 percent of CEOs expect the economy to improve in 2011. CEOs also said that they think corporate technology spending will increase (66 percent), plan to increase headcount (82 percent), and foresee their compensation packages improving in the new year (50 percent).