Startup Investment in Silicon Valley Threatened by Political Instability, Stock Market Fluctuations

Silicon Valley start-up investors haven't been this pessimistic since the financial crisis a decade ago

Lisa Suennen, a leader in Manatt’s digital and technology practice, shared her thoughts on the current startup landscape in a recently released survey from the University of San Francisco.

The Silicon Valley Venture Capitalist Confidence Index, a quarterly survey of almost 30 Bay Area VCs, reported that VC confidence hasn’t been this low since 2009. VCs are troubled by political instability, macroeconomic threats and living costs in the Bay Area, according to the Index.

Suennen noted that tech stocks dropped significantly in the fourth quarter of 2018, which creates a tougher environment in which to raise capital.

“Given the stock market volatility, the venture market may well begin to pull back,” said Suennen in the report. “The stock market is a leading indicator for venture activity, and despite there being a lot of cash out there, market instability creates somewhat of a chilling effect. If the market pulls back hard and stays there, venture valuations will drop.”

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