Venture capitalists believe the worst of the financial crisis is behind them but are not expecting a rapid recovery in initial public offerings and deals this year, a quarterly survey released on Wednesday showed.

Of the 42 venture capitalists who responded to a survey for this quarter's Silicon Valley Venture Capitalist Confidence Index, some expected a gradual resumption of M&A, investment and initial share float activity in the second half.

Many of the strongest companies (that) were bridged by existing investors through the past six to nine months ... will now be coming back to the market over the second half of '09 and early part of '10, Tom Rogers of Advanced Technology Ventures told the Index.

He said it will be interesting to see what kind of reception they get, but made no predictions.

But others warned that investment would remain depressed through 2009, and that IPO activity will stay below the peak levels of 2006 and 2007 for some time to come.

Venture capitalists have had to use precious capital to keep their existing start-ups afloat because they cannot sell them. As a result, they lack money to invest in new start-ups.

The backlog in maturing companies will need to clear before start-up activity returns to the pace seen in recent years, said Christian Cortis of Advanced Technology ventures.

The 5-year-old Silicon Valley index, penned by University of San Francisco Associate Professor Mark Cannice, peaked in the second quarter of 2007 at 4.38, then began dropping slowly before it plunged in 2008. It bottomed out at 2.77 in the last quarter.

The index slowly rebounded in 2009, but the latest index number of 3.37 is still lower than anything before 2008.

Those surveyed rated confidence at levels of 1 to 5.

I believe that with each passing week the 1920's worst case scenario continues to fade, the report quoted Kirk Westbrook, co-founder of invencor, inc, as saying. Invencor manages International Venture Fund, which focuses on startup investments in Hawaii, New Mexico, Arizona, Utah and Silicon Valley.

(Reporting by David Lawsky; Editing by Richard Chang)