First Quarter 2004

The University of San Francisco
Silicon Valley Venture Capitalist Confidence Index
By Mark V. Cannice, Ph.D. and Roger Chen, Ph.D.

The Quarterly University of San Francisco Silicon Valley Venture Capitalist Confidence Index is based on a survey of San Francisco Bay Area/Silicon Valley Venture Capitalists. Founded by Professors Mark Cannice and Roger Chen of the University of San Francisco School of Business and Management, the Index surveys the opinions of professional venture capitalists in their estimation of the high-growth venture entrepreneurial environment in the San Francisco Bay Area over the next 6 – 18 months.

In developing this confidence index of professional venture capital investors, we hope to provide a leading indicator of new investment in high growth businesses in the San Francisco Bay Area. We expect that this indicator of Bay Area new venture investment will also act as a fair proxy for new venture investment in the U.S., as the San Francisco Bay Area is the largest source of venture investment in the nation.

The USF Silicon Valley Venture Capital Confidence Index for the first quarter of 2004, based on an April survey of 24 San Francisco Bay Area Venture Capitalists, came in at 4.3 on a 5 point scale, and suggests an acceleration of Bay Area venture financings and entrepreneurial activity.

Some of the responding venture capitalists also gave an assessment as to why they had a high degree of confidence in upcoming venture investment. For example, Skip Fleshman, a principle with Asset Management, commented that, “great Ideas and founders have been hibernating”. Kent Goldman, an associate with Venture Strategy Partners, indicated that, “the main driver is that IPO doors are opening”, while Shomit Ghose, partner with Onset Ventures, offered that “Fortune 500 companies are starting to buy again”. Further, Joe Mandato, partner with DeNovo Ventures, added that, “lots of new money is being raised”, while Bryant Tong, partner with Nth Power, has seen a “change in the attitude of VCs”.

Consistently positive comments from the venture capitalists surveyed indicate a significant shift in sentiment to a favorable outlook for venture capital investment in the coming months and bodes well for a continued acceleration in entrepreneurial activity and new company formation.

Look for the second quarter USF Venture Capitalist Confidence Index in early July. Please find more information on the University of San Francisco School of Business and Management Entrepreneurship Program at: http://www.EntrepreneurshipProgram.org.

Mark V. Cannice, Ph.D. is an Associate Professor of Entrepreneurship and the Director of the USF Entrepreneurship Program (Cannice@usfca.edu).

Roger Chen, Ph.D. is an Associate Professor of Management and an Entrepreneurship Program Faculty at the University of San Francisco (Chenr@usfca.edu).