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VCs Open Up on Economic Trends

Despite recent funding deals for storage startups such as DataCore and Storwize, the overall investment landscape is less than rosy, warn VCs and analysts.

In a recently released survey of 201 venture capitalists undertaken jointly by KPMG and VC networking site AlwaysOn, almost three quarters of respondents said that the U.S. is in a recession, predicting that the unstable economy will take its toll on funding activity in the coming year.

Further, although some $30 billion worth of venture funding was invested in the U.S. last year, around half of the VCs surveyed expect this figure to fall in 2008.

Given the state of the economy, venture capitalists are signaling some caution in terms of their investment approach,” wrote Brian Hughes, co-leader of KPMG’s venture capital practice, in a statement.

Bright spots

Hughes added that it is not necessarily all doom and gloom, though: “[VCs] are indicating that though overall investment may decrease, there will still be demand for investments in certain geographies and industry sectors.”

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