North Carolina venture capitalists are extremely confident that the market for technology startups is on the rebound after a couple of moribund years, according to a new survey.
In conjunction with the start today of its 19th annual venture capital conference, one of the largest such events in the Southeast, the Council for Entrepreneurial Development polled 25 investors from North Carolina venture firms that back young information technology, life sciences and telecommunications companies.
Sixty-four percent of those surveyed say opportunities for business growth in the Research Triangle region are currently strong or very strong. By late 2004, 78 percent of the venture capitalists envision strong or very strong growth opportunities.
With the perception of an ascendant market, most venture firms are focused on making their portfolio companies profitable, which would make them attractive candidates for a sale or initial public stock offering and allow investors to cash out. Almost 70 percent of the venture capitalists say profitability in their portfolio is their top priority, compared with just 44 percent of those responding to a CED survey in late 2000, when hopes for a quick turnaround following the dot-com bust were still in the air.
The results reinforce the findings of another survey CED conducted recently. In that poll of executives of 71 area technology companies, most said they see venture firms placing more emphasis on long-term profitability than making a quick sale or IPO. As a result, less than 10 percent of the executives expect their companies to be sold or go public within two years.
“The results of this survey indicate investors’ renewed commitment to sound business fundamentals including a concentration on achieving long-term profitability,” CED President Monica Doss says in a statement. “Although entrepreneurship by nature presents its own unique business challenges, entrepreneurs have always been an optimistic bunch. And our survey results indicate that the Triangle’s knowledge capital and commitment to innovation continue to make the region a very favorable environment for high-growth start-ups.”
The venture capitalists surveyed are fairly evenly split on why they like to invest in Triangle-based companies. About a third like the diversity of startups in the region, another third prefer the area’s knowledge capital and the rest note the strong research base that leads to technological innovation.
For more information on CED’s Venture 2002 conference, which runs through May 1, visit: www.cednc.org/venture/2002
