Technology Startups Face Steeper Challenges But Funding Opportunities Still Exist, IDC Finds
FRAMINGHAM, MA – DECEMBER 4, 2008 – The ongoing financial crisis presents serious challenges for venture capital firms (VCs) and venture-backed technology startups. Volatile market conditions have brought the IPO market to a standstill while tight capital markets are making it difficult for VCs to raise new funds and forcing vendors to conserve capital. As a result, entrepreneurs can expect lower investment valuations and fewer acquisition opportunities in the months ahead.
Despite these daunting conditions, VCs will continue to make educated investments in solid opportunities. To attract the attention of tentative investors, startups will need to possess solid intellectual property (IP), a skilled management team, and a realistic path to market and profitability.
"Venture investing is a tried and true area for high-risk, high-reward investing, and that is its greatest advantage," said John Gantz, chief research officer at IDC. "These are not subprime mortgages disguised as something else and there's no Wall Street mumbo jumbo – it is what it is. Once the shock of the financial crisis wears off, and that may take a while, capital will seek new opportunities with the potential for significant returns."
The IDC report, Start-Ups and the State of the Venture Capital Community: IDC's Private Vendor Watch Service Profiles Bright Spots in Emerging Technology (IDC #215086), discusses the current state of the venture capital community and explores what can be expected in the coming year for venture-backed startups. The document also highlights five emerging tech companies in various IT markets that were recently scored and profiled in IDC's Private Vendor Watch Service (PVWS).
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
All product and company names may be trademarks or registered trademarks of their respective holders.