The 2014 Global Venture Capital Confidence Survey conducted by Deloitte & Touche LLP and the National Venture Capital Association (NVCA) covered 331 respondents from across the America, Europe, Middle East and Asia Pacific. Responses were received from firms as well as general partners that had assets under management across a wide range: from below $50 million to over $10 billion.
Venture capital destination – The US: Love and hate
The survey participants continued to rate the US highly as a venture capital destination – indeed this was the third year after 2012 that the country improved its rating in terms of investors’ confidence.
Venture capitalists were enthused by the robust US capital markets and its vibrant IPO environment that made it easy to raise funds as well as earn returns on the capital invested. The wealth of opportunities offered by a huge cross-section of new, innovative companies was another attraction.
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In the above graphic above the USA is ranked at 4.03, the highest amongst the surveyed countries. Respondents were asked to rate their assessment of their confidence level in a country on a scale of 1-5.
However, the survey respondents’ had a markedly different view when asked to rate their confidence in their own government’s ability to create investment-friendly policies. Here the US ranked the bottom of the heap, ranked 2.05, below even the likes of Taiwan and Brazil.
“A global environment where capital flows to companies from creation to growth to exit depends, in part, on government policies that encourage investment in new ideas and provide a clear pathway for innovations to go to market,” said Scott Sandell, general partner of New Enterprise Associates and chairman of NVCA.
“Decreased confidence in government drives capital away from economies, and if more isn’t done to improve the U.S. policymaking process, we could lose our foothold as the preeminent destination for innovation investment,” he said. “The venture capital community will continue to look toward global economies where governments are committed to fostering the growth of innovation.”
Venture capital destination – Drill down: Favoured sectors
The four most popular investor sectors were cloud computing, mobile technology, healthcare IT services and enterprise software.
The percentage figures indicate year-on-year changes. Note that clean technologies (+16%), robotics (+14%), healthcare IT and services (+9%), hardware (+9%) and semiconductors (+9%) were the sectors that moved up the most from last year in terms of popularity with venture capital investors.
The survey provided an interesting insight into the trend shown in the above graphic. Clearly, venture capital investors favour technology oriented sectors such as cloud computing and mobile because they are less capital intensive. On the other hand, sectors such as hardware and semiconductors, which required higher capital outlays, were not as popular.