Economy Forcing Venture Capitalists to Shift Strategies

The lingering recession is forcing venture capitalists to change their investment strategies, according to a recent survey.

More than half the venture capitalists who participated in the 2009 Global Venture Capital Survey said they would invest in fewer companies in the near future. But 13 percent claimed they would increase the number of companies in which they plan to invest.

The survey polled more than 700 capitalists throughout the world. It was conducted by Deloitte Touche Tohmatsu and the National VentureCapital Association (NVCA).

The survey results indicate U.S. venture capitalists will most likely invest in other countries in the next three years: Half of the respondents said they would increase investment inAsia (excluding India); 43 percent predicted they would boost investment in India; 36 percent plan to focus onSouth America; and 25 percent named Europe and the UnitedKingdom. Only 17 percent of respondents said they would increase investment in NorthAmerica.

NVCAPresident MarkHeesen said the results prove that the industry can expect to experience globalization in the next decade, both in investments and fundraising. Countries that can nurture entrepreneurs and investors, and offer customers an attractive exit opportunity will experience the largest economic gains by 2020.

Most venture capitalists predicted that a greater number of their limited partners would come from foreign countries. Thirty-eight percent, however, do not expect the number of foreign limited partners to change.