Survey: VCs Less Confident in Global Markets, Look to Home Turf

8/14/13Follow @curtwoodward

Private-market investors tend to be an optimistic bunch, at least in public—it comes with the territory when you’re betting on unknown or unproven companies and their founders.

But a new survey of market confidence from the National Venture Capital Association shows a pretty dour outlook in several cases from VC, private equity, and growth equity investors around the globe.

Dreams of hitting it rich in emerging markets like Brazil, India, and China have dimmed. Investors seem to be more confident making bets in their familiar home markets rather than going abroad, although the old standby of the U.S. market is relatively confidence-inspiring, according to the survey.

Confidence in the overall capital markets is middling, perhaps reflecting a hunger for more IPOs and corporate acquisitions. And most investors weren’t too keen on their home countries’ government policy-making abilities.

“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,” NVCA president Mark Heesen says. “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.”

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This is the NVCA’s ninth annual survey of global private-market investor confidence. The organization, aided by Deloitte, queried 403 investors at firms around the world. Most of the responses—35 percent, or 141—came from U.S. general partners.

The remaining 65 percent of responses were from outside the U.S. The second-largest group of respondents came from India, which accounted for 12 percent of the survey answers. Canada was third, at 9 percent.

Investors were asked to rate their confidence on the presented topics by rating each on a scale of 1 to 5, with 5 being the highest confidence.

One detail I found particularly interesting was U.S. investors’ confidence in domestic policy-making—it scored 2.17, down 13 percent from last year.

This comes amid some recent backlash against the Obama administration’s implementation of the JOBS Act, including new filing requirements for startups and angel investors, along with a delay in crowdfunding rules.

But even with ideology or specific issues aside, the latest Congress has just not done very much when compared with its predecessors.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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