VC investors say economy will slow down future IPOs

Venture capitalists expect the economy to drag down the initial public offering market until 2010, according to an industry survey.

Out of 297 venture capitalists, bankers, corporate buyers and entrepreneurs, 79 percent expect IPOs to pick back up in 2010, according to accounting firm KPMG, which authored the survey.

About 12 percent of respondents don't think IPO activity will ever reach historical levels again.

Venture capitalists, therefore, said they've extended their investment timelines by 12 months or more. Investors usually look for an IPO or acquisition within three to five years of an investment to make a return.

"There is no question that economic and market conditions have dealt the IPO market a blow," Packy Kelly, co-leader of KPMG's venture capital practice, said in a statement. "These conditions have led investment firms to hold positions longer, but will not hinder their appetites to continue to invest in attractive sectors."

The National Venture Capital Association, however, this month declared a "capital market crisis" for the industry because no venture-backed companies went public in the second quarter.

And venture investing fell 5 percent in the first half of this year compared with the first six months of 2007.

On Long Island in the first quarter, only one company received $500,000 in venture funding, up from no venture investments in the year-ago quarter.

Employers say raises won't change until 2009

Despite the sputtering economy, U.S. companies expect to keep raises steady next year.

According to a survey by Watson Wyatt Worldwide, an Arlington, Va.-based consulting firm, businesses across the country expect to give raises of 3.5 percent next year, the same amount as this year.

That number is slightly off from 2006, when workers got about 3.6 percent raises, before the housing slump and economic crisis slammed the nation.

Employers said in 2009, employees that exceed expectations can look for raises of about 4.2 percent and those that far exceed expectations could net 6 percent raises.

"Employees will view holding merit increase budgets steady as a positive sign that will help them offset higher energy and food costs," Laura Sejen, global director of strategic rewards consulting at Watson Wyatt, said in a statement.

Those raises may not help offset inflation, however. According to InflationData.com's Moore Inflation Predictor, inflation has already jumped from 2 percent last August to 5 percent in June and could hit 8 percent next year.

S&P: Recession will hit later than expected

Standard & Poor's senior economist said the looming national recession is still coming, it's just a little late.

Beth Ann Bovino said in webcast last week that the ratings agency still expects a mild, long recession, despite an uptick in economic indicators in June, which she said would be short-lived.