Software, communications and networking technologies are drawing the most investment capital with semiconductor technology not far behind, according to a new venture capital survey.
The 2006 global survey, released Wednesday (July 12) by Deloitte & Touche and the National Venture Capital Association, found that China and India remain the top overseas targets for U.S. venture capitalists. While many investors continue to focus on the U.S. market, the survey also found that 53 percent of U.S. respondents want to expand overseas.
The shift in focus is "a far cry from the time when VCs wouldn't leave their area code," Deloitte & Touche said in releasing the survey.
About 60 percent of global VCs identified the software industry as their primary target sector followed by communications and networking (53 percent of U.S. and 54 percent of foreign VCs). Semiconductors and medical devices were the main target of about 40 percent of respondents.
U.S. respondents selected energy and the environment as the fastest growing sector over the next five years.
The survey found that China (30 percent) and India (25 percent) topped respondents' list of targets for global investments. U.S. investors picked India as the top country outside the U.S. with "access to quality entrepreneurs." China topped the list of countries offering the best access to foreign markets.
Barriers to investment in China included lack of intellectuell property laws, travel time and lack of knowledge about the business environment. "India is now turning out quality entrepreneurs that rival those in the U.S.; China represents unique access to an extremely potent market," Mark Heesen, president of the National Venture Capital Association, said in a statement.
The survey also found growing interdependence between U.S. and overseas VC firms, resulting in an "unprecedented number of cross-border strategic alliances."
Deloitte & Touche said its survey of venture capitalists in the Americas, Europe, the Middle East and the Asian Pacific drew 505 responses from VC firms. The survey was conducted during the second quarter of 2006.