May 2, 2001 – Wireless startups seeking to bolster investments from Silicon Valley venture capitalists may want to mark January, 2002, on their calendars.

That's when Silicon Valley investors predict investment activities will pick up, according to a new market survey from Deloitte & Touche.

In fact, according to the second Silicon Valley Venture Capital Confidence Survey, 88 percent of venture capitalists indicated that the overall economic climate in the United States would decline or stay the same during the next six months, stalling investment activities.

Conducted by Deloitte & Touche's Corporate Finance group, the survey compiled responses from 200 Silicon Valley venture capital executives managing funds $50 million or greater. The survey indicates that two-thirds of the respondents expect investment levels to pick up during or after the first quarter of 2002. A third of the investors believed that the number of investments should begin to increase by the fourth quarter of this year.

"We are disappointed, although not surprised, at Silicon Valley's view that investment activity levels will not recover until the first quarter of 2002 at the earliest," said Graham Watson, Deloitte & Touche LLP Corporate Finance managing partner in Northern California and Hawaii. "In our view, it is essential for the economic health of the valley that the next generation of venture capital leaders steps forward much sooner."

Respondents expect the method of choice for exiting investments to be by way of mergers and acquisitions during the next six months. Ninety-five percent predict they will exit more investments in this manner. The once hot IPO market appears to be going dormant as only 1 percent of the VCs said that they would be exiting investments by way of IPOs.

The survey indicated that the hottest sector for venture capital investment during the next six months will remain biotechnology. Nearly 90 percent of those surveyed foresee investments in this segment to increase or remain the same.

Other findings: VCs expect the number of transactions in 2001 to remain constant in the key technology sectors of network hardware/software, wireless and telecom, and enterprise software. The hardest hit segment of the marketplace: Internet/mobile commerce. Approximately 61 percent of the respondents indicated that Internet related companies would receive less funding this year.

"The market needs VCs who are unaffected by the vagaries of the market; demonstrate that they are committed to long term investments in breakthrough technologies; and who are focused on looking forward with renewed optimism," said Watson.