SAN JOSE, Calif., June 4, 2008 — While venture capitalists continue to view the United States as the global leader in technology development and innovation, they also recognize specific pockets of technology innovation worldwide, according to a survey by Deloitte and the National Venture Capital Association (NVCA). 

The 2008 Global Venture Capital Survey, which was conducted in March 2008 and measured the opinions of nearly 400 venture capitalists worldwide, found European countries are emerging as leaders in life sciences and clean technology, two of the fastest-growing sectors globally. Asian countries were recognized as offering a high level of innovation in the information technology (IT) fields.

“The United States maintains the top spot as the global technology leader in innovation,” said Mark Jensen, national managing partner of Deloitte LLP's Venture Capital Services. “While the United States isn’t losing ground, the globalization of innovation is under way. The rest of the world is finding out what they’re good at, and venture capitalists recognize where those strengths lie.”

“While technology innovation and entrepreneurship have largely been a U.S. phenomenon, other countries are quietly excelling in areas that are critical to the future of venture capital investment,” said Mark Heesen, president of the NVCA. “We are operating in a global economy, and venture capitalists will follow the best technologies. Those countries that can marry the innovation and entrepreneurial work ethic as the United States has done will become formidable economic competitors in the 21st century.”

Europe Shows Strength in Life Sciences and Clean Technology Sectors
According to venture capitalists surveyed, Europe is emerging as a new leader behind the United States for life sciences and clean technology sectors. Germany and the United Kingdom in particular are quickly gaining recognition for their technological savvy in these fast-growing industries.

Germany was recognized by 43 percent of all respondents as leading the rapidly growing clean technology field, just behind the United States. Other countries to receive attention in this industry included Japan and Brazil.

“Germany is the beneficiary of a well-conceived, stable public policy that has ensured attractive markets for alternative energy technologies. This, combined with a strong general technology base, has fostered substantial innovation in the space,” said David Prend, partner, Rockport Capital. “As a result, for example, Germany, a country with marginal sun, is a leader in solar photovoltaic technology that they export to the rest of the world. Venture capital follows quality technology and innovation,” he added.

In the field of medical devices, 39 percent of the venture capitalists surveyed also cited Germany as being the second most recognized country for technology in medical devices and equipment, followed by the United Kingdom at 20 percent and Israel at 14 percent.

Regina Hodits, partner in the life sciences group at Atlas Venture, observed, “Germany, and more broadly the Alpine region, has always been a home to invention in the medical device field with a strong incumbent industry base. Today, this region provides a favorable environment for medical device development based on the regulatory framework, a high degree of innovation emerging from world-class medical research institutions and experienced key human resources.” Additionally, “London, the Medicon Valley in Denmark and Sweden, and emerging centers of excellence in Switzerland, are hubs around which biotech innovation is growing,” she added.

The United Kingdom was identified in the second spot by 31 percent of the respondents as having leading technology for biopharmaceuticals, followed by Switzerland at 18 percent and Germany at 15 percent.

Asian Countries Vie for Top Spots in Information Technology 
While there has been great interest surrounding the promise of China and India as emerging technology centers of the world, the United States continues to be viewed by the majority of venture capitalists surveyed worldwide as the global leader in technology in all IT sectors. Yet Asian countries consistently ranked high in IT among all other nations.

Japan Leads Behind the United States in Telecom
After the United States, Japan fared well in telecommunications in the minds of venture capitalists, with 27 percent of all respondents identifying the country as having leading technology in the sector. Sixteen percent of venture capitalist respondents named Israel as a leader in telecommunications. 

“The Japanese government was one of the first to recognize the value of developing and maintaining a pervasive, high-speed broadband infrastructure throughout the country, fueling significant innovation around the next generation of broadband applications,” said Dixon Doll, cofounder and general partner, DCM. “Today, we are seeing a new wave of entrepreneurship in the country as it relates to communications. Providers such as Yahoo!BB, which are aggressively innovating, are compelling the traditional broadband monopolies to do the same.  The result is extremely healthy competition and can only mean more advancements in the Japanese telecommunications arena going forward.”

Taiwan Strong in Semiconductors
Taiwan captured the No. 2 spot behind the United States in the semiconductor industry with 31 percent of the respondents recognizing the country as having the top technology in the world. Twenty-six percent of venture capitalists named Japan as having top technology for semiconductors, followed by China at 16 percent. 

“Taiwan has executed tremendously well and has earned its leadership position in the manufacturing of semiconductors. In addition to excelling in the area of outsourced manufacturing, Taiwan has been very smart in attracting and growing talent and partnering with leading edge companies in the semiconductor space,” said Wayne Cantwell, general partner, Crescendo Ventures. He added, “Venture capitalists generally select Taiwan as the country of choice for manufacturing their portfolio companies’ semiconductors.”

India Ranks High in Software
In the software sector, 41 percent of the venture capitalists surveyed viewed India as having top technology, placing it second behind the United States.  India was followed distantly by the United Kingdom (13 percent) and Israel (12 percent) as having strong technology in the software space. 
“The maturity of the software services industry and availability of talent in the services space is India’s key strength. In some sense, the cycle of automation that took place in developed geographies in the 1990s is taking place in India now. As the domestic Indian economy expands rapidly, growth in sectors such as financial services and telecom is creating demand for automation and creating investment opportunities around lower price-performance points that are unique to emerging markets," said Alok Mittal, managing director, Canaan Partners.

United States Viewed as Technological Leader Among Venture Capitalists
Venture capitalists from around the world view the United States as having the best technology in all sectors surveyed. The following represents the percentage of global venture capitalists that named the United States to the No. 1 or No. 2 spot in the noted industry sectors:

• Telecommunications — 71 percent
• Semiconductors — 81 percent
• Software — 91 percent
• Biopharmaceuticals — 94 percent
• Medical Devices — 94 percent
• Clean Technology — 79 percent

About NVCA
The National Venture Capital Association represents approximately 480 venture capital and private equity firms. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy and support entrepreneurial activity and innovation. According to a 2007 Global Insight study, venture-backed companies accounted for 10.4 million jobs and $2.3 trillion in revenue in the United States in 2006. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.

About Deloitte 
As used in this document, “Deloitte” means Deloitte LLP.  Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.