WTIA Venture Capitalist Outlook Survey Shows Continued Positive Trends for Q1

Improved revenue growth and hiring; layoffs decrease; state of economy remains top concern

SEATTLE, WASH – January 26, 2010 – Today, the Washington Technology Industry Association (WTIA) released the results of its Q1 2010 Venture Capital Outlook Survey.  The state’s venture capital (VC) community continues to express optimism for their portfolio companies’ growth in terms of revenue and hiring, in addition to an increased deal flow. In general, the main concerns for VCs in the coming quarter remain the national economy and overall business conditions.

“Judging by our latest survey, the technology sector In Washington could very well be rounding the corner from stabilization to growth, with VC predictions of layoffs down for the third consecutive quarter and the most optimistic hiring predictions since Q3 2008,” said Ken Myer, president and CEO of the WTIA. “The past year and a half has been difficult for the entire economy, but innovation – especially technology innovation - has always been the engine that sparks recovery and growth. These are very hopeful signs for 2010.”

The WTIA queries top VC firms statewide about indicators for the coming quarter and insights on topics such as deal quality, deal quantity, expected exits and various business metrics for their portfolio companies. Results are compared to previous quarters. Key highlights from the Q1 2010 survey include:

• Confidence in deal flow quantities increase. Sixty percent of respondents predict new deal flow quantity to be moderately higher with another ten percent predicting a substantially higher volume. Sixty percent of respondents report a moderately higher confidence in quantity of deal flow expected to close compared to only 33 percent last quarter.

• Portfolio company revenue growth up. Ninety-one percent of respondents predict revenue growth for portfolio companies with 82 percent reporting “moderately better” and nine percent reporting “substantially better.”

• Companies increase workforces, reduce layoffs. Twenty-seven percent of respondents predict their portfolio companies will increase their workforce by more than ten percent, making this the most optimistic prediction since the third quarter of 2008. Additionally, layoff predictions are down for the third straight quarter with only nine percent predicting their portfolio companies will decrease their workforce by ten percent.

• Average size of new investment rounds is predicted to increase. Sixty percent of respondents predict their new investments in Q1 will be in the $3-6 million value range compared to 44 percent who were investing at the same deal size last quarter. Additionally, ten percent are reported to be in the $6-10 million value range.

“There is significantly more optimism heading into 2010 than there was heading into 2009,” said Matt McIlwain of Madrona Venture Group. “While the uncertainty around consumer demand remains, there are legitimate reasons to expect that the technology sector will return to growth in 2010 and both start-up funding and M&A transactions will improve as a result.”

The summary and full results of the survey are available on the WTIA’s Web site: http://www.washingtontechnology.org.

This survey is sponsored by Ernst & Young and Perkins Coie and developed in partnership with Evergreen Venture Capital Association.

Full Summary: http://www.washingtontechnology.org/documents/pressreleases/WTIA_Summary_VCOS_Q1_2010.pdf

Raw Data:

http://www.washingtontechnology.org/documents/pressreleases/WTIA_RawData_VCOS_Q1_2010.pdf

About the Washington Technology Industry Association

The Washington Technology Industry Association, founded in 1984, is one of the largest statewide associations of technology companies, IT departments and individual technology professionals in North America. With more than 1,000 members representing more than 125,000 employees in Washington State, the association is a catalyst for sharing expertise, fostering collaboration, delivering key business services and advancing the value and global impact of technology companies doing business in Washington. The association’s global partners are Microsoft, Regence BlueShield, Vertafore and Wells Fargo Insurance Services. The association’s funding partners are AH&T Insurance, F5 Networks, Moss Adams LLP and RealNetworks. For more information, go to www.washingtontechnology.org.

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Media Contact:

Jeanine Dellinger

Sterling Communications for WTIA

206-388-5787

jdellinger@sterlingpr.com