Venture Capitalists Eying Investment in Overseas High-Tech Markets

Venture investors are increasingly turning to overseas markets for promising investments in key high-tech industries, according to the 2008 Global Venture Capital Survey conducted by Deloitte and the National Venture Capital Association (NVCA). The annual poll of 400 international venture capital investors found that the U.S. is still perceived as the strongest technology economy in all sectors, but other countries are developing industry specializations that allow them to be competitive with the U.S. in one or two particular areas. While no single country is likely to overtake the U.S. high-tech venture investment overall, cumulatively, these niche specializations in other countries are beginning to mitigate U.S. dominance.
 
For example, the survey reveals that several countries within the European Union are now recognized as hotspots for investment in both clean technology and the life sciences, with individual countries having strong niches in specific sectors. Forty-three percent of respondents felt that Germany had the greatest expertise in clean technology, second only to the U.S. Germany's stable alternative energy policy environment and a strong technology base has allowed the nation to develop a sophisticated clean tech industry. Germany also ranked second in medical devices, with the United Kingdom in third. The U.K. was cited as the second most attractive market in biopharmaceuticals, ahead of Switzerland and Germany.
 
The strongest Asian markets have also developed industry niches that have attracted the attention of venture capitalists. Japan ranks just behind the U.S. in telecommunications. Taiwan is second in semiconductors. India is very competitive with the U.S. in software.
 
NVCA notes that though these findings might not be significant individually, together they represent a significant shift in thinking about the U.S.'s position in global technology markets and venture capital investment. Last year’s survey found that U.S. venture capitalists were reluctant to invest directly overseas and preferred to keep their activities close to home. Respondents were more likely to expand their international investments by investing in U.S. companies with a multinational presence than by investing in foreign companies. This was true, despite the fact that 58 percent of respondents found the U.S. investing environment too litigious and 48 percent found it hampered by government regulation. This year's survey indicates that investors are becoming more comfortable with the idea of investing overseas and more aware of the progress being made in foreign high-tech industries.
 
Read more about the most recent findings from Deloitte and NVCA’s 2008 Global Venture Capital Survey at: http://www.nvca.org/pdf/PressRelease2008final.pdf