Silicon Valley investors may be excited about all the wacky innovation in their backyard, but the political environment and global economy is really bringing them down.
Optimism among venture capitalists in the area dropped to the lowest level in almost a decade in the fourth quarter, according to the Silicon Valley Venture Capitalist Confidence Index, a quarterly survey of 28 Bay Area VCs released on Thursday. Confidence hasn't been this low since 2009, when the country was still mired in a historic banking and housing crisis.
"Seldom have political concerns so significantly impacted confidence and the factors that underpin the venture creation and innovation machine of Silicon Valley," wrote Mark Cannice, a professor at the University of San Francisco School of Management, in the report, which he's been producing since 2004. "However, current political wrangling, both domestically and abroad, now threatens the smooth functioning of the venture creation business model."
The survey results account for the start of the government shutdown, which began as the year was wrapping up and threatened to disrupt the 2019 IPO pipeline. It created yet another challenge for a technology industry that's already concerned about a potential trade war with China and additional regulation, following the privacy-related issues that have plagued Facebook and Google.