Deloitte Brightman's Asher Mechlovich says, "As the effects of the financial service sector turmoil continue to spread into other regions and markets, Israeli high tech and venture capital industries gear up for some rough times."
The survey states that 64% of Israeli venture capitalists advise their portfolio companies to cut expenses and make necessary adjustments to the new economic climate. 29% of venture capitalists say that their fund started prioritizing which of its portfolio companies it might abandon and write down as losses if the situation deteriorates, while 21% of respondents say that their fund will probably do so soon.
"Start-ups need to cut expenses and try to be cash positive. Start-ups can survive, and even thrive, during volatile economic times by building business models that are more responsive, adaptable, and efficient with resources," stated Mechlovich.
Q3 VC Indicator survey: 81% of venture capitalists believe that the overall economic climate will worsen over the next six months.
81% of venture capitalists believe that the overall economic climate will worsen over the next six months - the highest rate of expectation for the economic climate to worsen since the fourth quarter of 2001. However, 82% of respondents believe that the pending crisis will not be as severe as the dot.com bubble collapse of 2000.
88% of respondents predict that venture capital will face "harsh times" in raising new funds. 70% of respondents predict that high-tech companies' revenue will decline slightly, while 30% predict a sharp reduction. 61% of venture capitalists fear that the Wall Street crisis might prompt limited partners to try and withdraw their venture capital commitments.