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November 20, 2009

WASHINGTON, DC - The seed capital industry has revaluated return expectations and fund-raising outlooks, according to a new national survey conducted by the Fox School of Business and the National Association of Seed Venture Funds(NASVF).

Survey respondents indicated that most are planning to make an exit within the next six months, and that they expect four times the return on capital from that exit. In addition, more than half indicate they are in the process of securing follow-on funding over the next six months.

“Early-stage and seed funding organizations with solid track records are looking positively at securing more funding. Four times the return on investment seems to be the new norm,” says Jim Jaffe, president and CEO of NASVF.

The survey respondents included angel investors, angel funds, early- and seed-stage venture capital funds and economic development agencies that provide investments for start-up companies.
NASVF coordinated the survey in order to deliver a data point for trending early-stage investment activity in the U.S.

“Clearly, there is a need to fill the information gap regarding the seed capital industry, and this survey helps to give a window into the future for investing in the development of new ventures,” says Jaffe.

The survey indicated regional differences in outlook, with organizations west of the Mississippi having a more optimistic view of the future for seed capital investment.

“What really caught my eye was that the Western and Midwestern seed funds expect to raise almost 11 times the amount of funds as Southwest funds,” says Dr. Raj Chaganti, professor of Strategic Management at the Fox School of Business.

The survey also captured differences in investment outlook by angel, seed and venture funds. Angel funds were more upbeat about the outlook for the industry over the next six months than venture and seed funds.

“This may indicate that Venture Funds are waiting for markets to improve in 2010,” says Jaffe.
The Fox School and NASVF will survey early- and seed-stage funding sources again in the spring to monitor industry outlook and confidence levels and plans of investing organizations.

For the full report see: www.nasvf.org