Optimism is prevalent in the healthcare IT sector, where 77 percent of venture capitalists expect investment to increase, according to results of the 2011 Venture View predictions survey, conducted by the National Venture Capital Association (NVCA) and Dow Jones VentureSource.

There was no clear consensus on how medical devices and biopharmaceuticals investments would fare as VCs were split almost evenly as to whether investment in both sectors would increase, decrease or remain the same.

Overall, venture capitalists predict venture firms will invest more, and CEOs of venture-backed companies expect to hire more, sell more and get paid more in 2011, according to results of the survey. While optimism about the venture industry and the national economy prevailed, VCs were divided on how fundraising would trend in the forthcoming year.

The annual Venture View survey reflects responses from more than 330 venture capitalists in the United States and 180 CEOs of U.S.-based venture-backed companies collected between Nov. 29 and Dec. 10, 2010.

"At this time last year, the venture capital industry was optimistic, but cautiously so," said Mark Heesen, president of the NVCA. "The market was so troubled in 2009, the sentiment was that things had to get better in 2010. It turns out our predictions were correct and in the past year we have moved beyond the financial crisis and returned to doing what we do best -building great companies.

"The improving exit market and a renewed excitement in the IT sector have engendered a confidence among VCs and the CEOs of the companies in which we invest that promises to propel the start-up community forward in 2011," Heesen added. "While the venture industry will continue to evolve, and likely contract, the companies we fund will continue to grow, innovate and drive the U.S. economy."

Investments expected to rise
More than half (51 percent) of VCs expect venture capital investment to pick up in 2011 while about a quarter (24 percent) expect investment to remain the same. Twenty-four percent of VCs expect investment will decrease. Optimism prevails across stage of development with 51 percent of the VCs predicting increases in later-stage investment, 49 percent in expansion and seed investment, and 46 percent in early-stage investment. Of those VCs who invest in the earlier stages, 30 percent plan to co-invest more with angels.

CEOs are even more hopeful as 58 percent predict an increase in venture investing. Of those CEOs polled, 64 percent plan to raise a round of financing in the year ahead.

Focus on IT
In a departure from recent years, when asked about their predictions for industry sectors, more VCs expect investments in information technology to increase than in the life sciences and cleantech sectors. Investments in consumer Internet and digital media (82 percent), cloud computing (80 percent) and mobile/telecom (66 percent) are anticipated to increase in the year ahead.

However, VCs also say consumer Internet and digital media (69 percent) and cloud computing (47 percent) are the two sectors most likely to see investment "froth," a term used among the venture community to suggest over investment.

Fear of a cleantech bubble may be subsiding as only 28 percent of VCs identified the sector as likely to see investment froth in the year ahead. Only 38 percent expect increases in energy investment.