VCs Hot on U.S. Market for Cloud, Mobile Technology Investments

Global investors are feeling more confident about the U.S. economy and are poised to start shoveling money into select technology sectors, according to new research.

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Technology investmentsGlobal investors are feeling more confident about the U.S. economy and are poised to start shoveling money into select technology investments, according to new research from Deloitte LLP and the National Venture Capital Association.

The 9th annual Global Venture Capital Confidence Survey, released today, indicates global investors are increasingly enthusiastic about technology investments in mobile, cloud, enterprise software and health care IT, all areas of significant focus for technology channel partners.

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On a scale of one to five, with five being the most confident, U.S. venture capital investors picked cloud computing as their clear favorite with a score of 4.06. The domestic investment gurus also gave the thumbs up to technology investments in mobile (3.99), enterprise software (3.74) and health care IT and services (3.57). The same group showed the least confidence in clean energy and green technologies (1.92) and semiconductors including electronics (2.34).

For global investors, the list was similar, with mobile technologies coming out on top at 4.04, followed by technology investments in cloud computing (4.03) and enterprise software (3.69). The global group showed the least investment confidence in semiconductors (2.53) and hardware (2.59), according to the survey of more than 400 venture capital, private equity and growth equity investors in the Americas, Europe, Asia Pacific and Israel.

The good news for a potential windfall of capital investments in IT was matched by the growing sentiment that the U.S. is once again the market of greatest potential, while enthusiasm for once-hot emerging markets is beginning to wane. U.S.-based VCs are  now particularly hot on making investments in their own backyard.

"After years of enthusiasm for emerging markets, investor sentiment is increasing favorably towards the United States in an environment where venture capitalists remain cautious about the global economy and pessimistic about government policies around investing," said James Atwell, national managing partner of the Emerging Growth Company Practice at Deloitte. "Uncertainty continues to be the primary concern for investors."

According to the survey, global investors are taking a sideways view of investing in previously desirable areas such as Brazil, which ranked a 3.33, down 22 basis points from last year. China fared slightly worse at 3.26, a drop of 19 basis points from a year ago, while India fell seven basis points to 3.17.

Survey respondents noted challenges with infrastructure, legal and policy restrictions along with other growing pains in the emerging markets that contributed to the shift in enthusiasm for investing in the U.S.

"Here in the United States, many venture capital firms are turning inward where tremendous investment opportunity exists in their own backyard," said National Venture Capital Association  president Mark Heesen.  "After a decade of VCs kicking the tires abroad, global investing remains the strategy of fewer firms that have the resources and wherewithal to successfully manage an international portfolio.

“Although we remain challenged here in the U.S. from a political and capital markets perspective, our issues are familiar and addressable -- and optimism is expected to increase throughout the year," Heesen said.

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