This dichotomy is evident in a survey of venture capital confidence conducted by Deloitte and the National Venture Capital Association.
The survey of more than 440 VCs and GPs in growth and private equity found little enthusiasm for the global economy over the coming year. By in large they see better prospects for their own country’s economy than they do the world’s, which perhaps is some consolation.
However they see attractive investment opportunities in the emerging markets of Brazil and China, as well as in the more established stomping grounds of the United States and Israel.
Perhaps most discouraging in the survey is the apparent concern venture capitalists have about raising new funds from domestic LPs. Overall, GPs have just a 2.61 confidence level they will be able to raise new money in the next year from domestic LPs – a response that is smack in the middle of the spectrum of 1 the lowest confidence and 5 the highest.
Confidence is slightly higher in the United States – 2.8 – but lower in the United Kingdom, Germany and Canada. General partners in Brazil are most confident about raising money domestically, with a 3.88 confidence. China’s GPs also are more upbeat with a 2.94 confidence level.
An interesting twist on global fundraising is that GPs are noticeably more confident they will raise money from non-domestic LPs, or from limited partners outside a GP’s home country. Overall confidence is 2.92, compared with the 2.61 for domestic LPs. This is almost exactly the level in the United States – 2.9 – compared with the 2.8 for domestic LPs, only a modest divergence. The trend is more pronounced in many European countries, in Israel, Japan, and of course in India and China, where expectations are often significantly higher for success with non-domestic LPs than domestic LPs.
An equally interesting dichotomy shows up in deal making. Overall, GPs are relatively confident about investing in their home countries. The confidence level is 3.53. But they are significantly less so about investing in a foreign country. The level is 2.99.
Some of the least enthusiasm for investing overseas is found among U.S. GPs – 2.77 confidence – and among those in Brazil – a 2.5 confidence level. Some of the greatest confidence comes from Germany (3.52) and Israel (3.4).
It is probably worth noting that the confidence about raising money from abroad and the enthusiasm for investing domestically is at least consistent.
Perhaps least surprising finding in the survey is the relative confidence assigned to investing in industry segments. Cloud computing is the top segment, followed by software, social networking and new media, and health care IT and services.
Consumer businesses also rate high in investment confidence, but cleantech investing does not.
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