Global trends in venture capital 2006 survey
Global report sponsored by Deloitte Touche Tohmatsu
Venture capital is often seen as the life blood of the technology industry, offering the resource and capacity for ideas to be given the chance to develop from conception into stand-alone products/technologies or life changing products and services.
VCs all over the world are taking the idea of global investing more seriously than ever before. In querying VCs about their interest in expanding their global investment focus, more than half said they would expand their investment focus internationally within the next five years. This trend was similar in all geographies with the exception of the Middle East where only 33 percent of respondents indicated they intend to expand their investment focus. Last year’s results reflected a similar interest in global expansion.
Strategies for global investing
This year’s survey data strongly suggests there will be a growing international interdependence among VCs, resulting in unprecedented numbers of strategic alliances, global informal networks, and direct investment in foreign VC firms.
Instead of setting up offices in foreign markets – as most of this year’s survey respondents seemed reluctant to do – most are looking to expand through networking opportunities that will involve a heavy reliance on established local players. When asked how their business practices would change as a result of international expansion, over 80 percent of the respondents said they expected partners to travel more. While partners may rack up frequent flier miles, respondent data suggested that few would be offered expatriate packages for relocation. Instead, responses suggested that VCs eyeing expansion planned to partner up with locally-based VCs and hire investment staff with expertise in targeted markets.
Strategic alliances with foreign-based firms, already a popular form of expansion among last year’s respondents, carried even more favor in 2006. Over 70 percent of respondents identified strategic alliances as a key method for globalization. The finding represents a market jump from last year when less than 60 percent of respondents identified strategic alliances as a key method for geographic expansion.
- Develop strategic alliance(s) with foreign based firms
- Invest only with investors that have a local presence
- Require partners to travel more
- Require partners to transfer to foreign locations
- Relocate certain portions of portfolio companies to be near our firm
- Open new office(s)
- Hire investment staff with expertise in target country(ies)
About the survey
Deloitte Touche Tohmatsu Technology, Media & Telecommunications Group’s 2006 Global Venture Capital Survey is designed to provide insight into the attitudes and intentions of venture capitalists around the world regarding specific geographic regions and industry sectors over the next five years. The survey was conducted in association with Venture Capital Associations in the Americas, Asia Pacific and Europe, Middle East and Africa.
- Press release: Global venture capital trend emerging – Europe continues to attract significant interest
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