Venture capitalists feel most confident when they stay close to home.
The 2013 Global Venture Capital Confidence report, which came out today, found that investor confidence in the U.S. has grown over the past year, while enthusiasm for companies in emerging markets is fading.
Deloitte and the National Venture Capital Association conducted the study. It questioned 403 venture capital, private equity, and growth equity investors around the world to assess their sentiment on the global VC ecosystem, as well as specific markets, geographies, and industries.
“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 Deloitte partner James Atwell in a statement. “Uncertainty continues to be the primary concern for investors.”
The survey found that overall confidence in next year’s global economy is high, with Japan and Germany rating the most confident about their economy. Investors are bullish about opportunities in the U.S. despite the fact that American faith in its domestic government is among the world’s lowest. VC confidence about investing in Europe remains low, and UK levels remained flat. Investor confidence in Israel, SIngapore, South Africa, and Japan are all up, while confidence in Brazil, China, and India is fading.
Although they feel positive about the global economy, most investors are not confident about global capital markets. Respondents said they are unsure about their home country’s ability to enact government policies that support domestic investment, or about the ability to raise funds from Limited Partners (LPs) in the next year. There is also a big drop off in confidence ratings domestically, as compared to abroad. NVCA President Mark Heesen said this is because fewer firms have the resources and “wherewithal” to successfully manage an international portfolio.
The top five sectors where VCs are the most confident are mobile, cloud computing/software-as-a-service, enterprise software, consumer software, and new media/social networking. Mobile is the most confident sector overall, while cloud computing/SaaS is the most confident sector in the U.S. Confidence in medical devices and biopharmaceuticals is the same as last year, but the report found significant downturns in the confidence surrounding consumer businesses and energy/clean tech.