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VC Predictions for 2013: Good, Bad, and Ugly

Wednesday, 19 Dec 2012 | 12:08 AM ET
Jill Fromer | Photodisc | Getty Images

Concerns about the fiscal cliff are weighing on the VC community, but investors and CEOs of venture-backed companies still see some bright spots in 2013, like emerging markets and health care IT.

The National Venture Capital Association has released its "Venture View Predictions Survey Results," a survey of more than 600 VCs and CEOs of venture-backed companies. The verdict: "pockets of optimism despite ongoing uncertainty.," according to the 2013 Venture View predictions survey.

First, the Ugly: The fiscal cliff continues to loom large, and the respondents see the federal government having unprecedented influence over the growth or stagnation of the industry. Both VCs and CEOs predict fewer available VC dollars, though more than two thirds of the CEOs surveyed plan to raise money anyways.

(Read more: Predictions: Will Economic Growth Pick Up in 2013?)

When it comes to economic growth, less than half of VCs and CEOs expect the US economy to improve in 2013, a slightly more pessimistic perspective than last year.

The good: Optimism is shifting within IT from consumer companies, to business and health care startups. Most VCs predict an increase in investment in Business IT and Health care IT, while only 35 percent see an increase in Consumer IT, the sector that's most often cited in the survey as ripe for over funding.

(Read more: US Tech, Health Care Stocks Looking Attractive)

One big change in 2013: startups global activity is expected to increase, with increased investment projected in Latin America, China, and India.

The bad: The VC market is expected to "contract and concentrate." The survey finds that the fund-raising environment will continue to be challenging for VCs. Still, nearly half of VCs expect returns to improve next year.

And VCs and CEOs are skeptical about progress on policy issues near to their heart - about half think that a cyber security bill will pass, and 47 percent think immigration reform will pass. Fewer are expecting a federal budget overhaul.

(Read more: Markets: Will the US Economy Roar Back?)

—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.