A Deloitte Touche Tohmatsu (DTT) global survey of venture capitalists shows that the recession is affecting the industry around the world, leading some to alter their investment strategies.
51% of respondents to Deloitte's 2009 Global Venture Capital survey said that they are decreasing the number of companies in which they plan to invest, and just 13% are increasing this activity.
Deloitte Global Managing Partner of the Technology, Media & Telecommunications Industry Group Igal Brightman said, "Although the capital markets are presenting an impressive recovery, the crisis in the real economy is still here, and is reflected, among other things, in a decrease in demands and a toughening business environment, which have a negative impact on the performance of portfolio companies. Therefore, venture capital funds in Israel and around the world are focusing on their existing portfolios. The lesson of the bubble bursting has been learned: the focus should be on the portfolio and on later stage companies, in order to ensure the return of the investment".
The recession is also affecting the global reach of VC investments. 52% of all venture capitalists surveyed in the 2009 study indicate that they are currently investing outside their home countries. Looking forward, over the course of the next three years, 19% of respondents believe that investment will rise in Israel, while 50% believe that investment will increase in Asia (excluding India); 43% in India; 36% in South America; 25% in Europe and the UK; and 17% in North America.
In terms of industries, most venture capitalists do not expect major shifts in emphasis. 79% anticipate stable levels of investment across all industry sectors. An exception is the cleantech sector, where 63% of venture capitalists expect to increase their investments over the next three years.
The medical device sector ranked second in terms of growth potential, with 37% of the respondents anticipating increases in investment, followed by new media (26%), consumer business and biopharma (24%) and software (22%).
Venture capitalists are less optimistic about more mature sectors, such as the telecommunications and semiconductor industries, with just 15% and 16% of venture capitalists surveyed planning to raise their investment in those sectors respectively.
The Global Venture Capital survey measured the opinions of more than 700 venture capitalists worldwide, including Israel. Deloitte Brightman Almagor Zohar is the Israeli affiliate of Deloitte Touche Tohmatsu
Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2009
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