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VCs Say the Worst Is Over

A bit of cheer has emerged on the venture capital front: According to a recent survey conducted by consultancy Deloitte & Touche LLP, VCs on both coasts of the U.S. are starting to feel better about loosening up the purse strings and investing in startups again.

While not entirely lifting the fog of economic gloom, D&T's survey of approximately 1,200 venture capitalists found that nearly 90 percent of the respondents believe it's OK to start investing in technology startups again, while nearly 93 percent think that M&A activity will also stabilize or even pick up, a small sign of hope for the moribund tech industry.

"We see certainly an upturn, albeit from a pretty gloomy time," says Will Frame, a managing director with D&T's corporate finance services division. According to Frame, poll respondents say the hard, startup-killing, portfolio-management decisions have mostly been taken already, leaving VCs free to look to the future.

"The individual VCs say they are looking for new deals, and that's good news," Frame says.

Of course, the optical and storage segments have retained their afficionados, even through the overall decline in venture activity. While not at the pace of earlier boom levels, it's still not uncommon for $100 million deals to get done, like the recent rounds snared by Santera Systems Inc. and 3PARdata Inc. (see Investors Stand By Santera and 3PARdata Snags $100M).

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