VCs Identify Pockets of Innovation Around the Globe
Anisha Sharma Emily Mendell
Hill & Knowlton NVCA
VENTURE CAPITALISTS AROUND THE GLOBE IDENTIFY POCKETS OF
TECHNOLOGY INNOVATION ACCORDING TO A STUDY BY DELOITTE AND THE
NATIONAL VENTURE CAPITAL ASSOCIATION
U.S. maintains lead, but Europe Shows Strength in Life Sciences and CleanTech; Asia Shows
Strength in Information Technology
SAN JOSE, Calif., June 3, 2008 — While venture capitalists continue to view the United States as the
global leader in technology development and innovation, they also recognize specific pockets of
technology innovation worldwide, according to a survey by Deloitte LLP and the National Venture
Capital Association (NVCA).
The 2008 Global Venture Capital Survey, which was conducted in March 2008 and measured the
opinions of nearly 400 venture capitalists worldwide, found European countries are emerging as leaders
in life sciences and clean technology, two of the fastest growing sectors globally. Asian countries were
recognized as offering a high level of innovation in the information technology fields.
“The U.S. maintains the top spot as the global technology leader in innovation,” said Mark Jensen,
national managing partner of Deloitte’s Venture Capital Services. “While the U.S. isn’t losing ground,
the globalization of innovation is underway. The rest of the world is finding out what they’re good at, and
venture capitalists recognize where those strengths lie.”
“While technology innovation and entrepreneurship have largely been a U.S. phenomenon, other
countries are quietly excelling in areas that are critical to the future of venture capital investment,” said
Mark Heesen, president of the NVCA. “We are operating in a global economy and venture capitalists
will follow the best technologies. Those countries that can marry the innovation and entrepreneurial work
ethic as the U.S. has done will become formidable economic competitors in the 21st century.”
Europe Shows Strength in Life Sciences and Clean Technology Sectors
According to venture capitalists, Europe is emerging as a new leader behind the U.S. for life sciences and
clean technology sectors. Germany and the United Kingdom in particular are quickly gaining recognition
for their technological savvy in these fast growing industries.
Germany was recognized by 43 percent of all respondents as having the best expertise in the rapidly
growing clean technology field, just behind the United States. Other countries to receive attention in this
industry included Japan and Brazil.
“Germany is the beneficiary of a well conceived, stable public policy that has ensured attractive markets
for alternative energy technologies. This combined with a strong general technology base, has fostered
substantial innovation in the space,” said David Prend, partner, Rockport Capital. “As a result, for
example, Germany, a country with marginal sun, is a leader in solar photovoltaic technology that they
export to the rest of the world. Venture capital follows quality technology and innovation.”
In the field of medical devices, 39 percent of the venture capitalists also cited Germany as being the
second most recognized country for technology in medical devices and equipment, followed by the
United Kingdom at 20 percent and Israel at 14 percent.
Regina Hodits, partner in the life sciences group at Atlas Venture, observed, “Germany, and more broadly
the Alpine region, has always been a home to invention in the medical device field with a strong
incumbent industry base. Today, this region provides a favorable environment for medical device
development based on the regulatory framework, a high degree of innovation emerging from world-class
medical research institutions and experienced key human resources. Additionally, London, the Medicon
Valley in Denmark and Sweden, and emerging centers of excellence in Switzerland, are hubs around
which biotech innovation is growing,” she added.
The United Kingdom was identified in the second spot by 31 percent of the respondents as having leading
technology for Biopharmaceuticals, followed by Switzerland at 18 percent and Germany at 15 percent.
Asian Countries Vie for Top Spots in Information Technology
While there has been great interest surrounding the promise of China and India as emerging technology
centers of the world, the United States continues to be viewed by the majority of venture capitalists
worldwide as the global leader in technology in all IT sectors. Yet, Asian countries consistently ranked
high in information technology among all other nations.
Japan Leads behind the U.S. in Telecom
After the U.S., Japan fared well in the minds of venture capitalists in telecommunications with 27 percent
of all respondents identifying the country as having leading technology in the sector. Sixteen percent of
the VC respondents named Israel as a leader in telecommunications.
“The Japanese government was one of the first to recognize the value of developing and maintaining a
pervasive, high-speed broadband infrastructure throughout the country, fueling significant innovation
around the next generation of broadband applications,” said Dixon Doll, co-founder and general partner,
DCM. “Today, we are seeing a new wave of entrepreneurship in the country as it relates to
communications. Providers such as Yahoo!BB, who are aggressively innovating, are compelling the
traditional broadband monopolies to do the same. The result is extremely healthy competition and can
only mean more advancements in the Japanese telecommunications arena going forward.”
Taiwan Strong in Semiconductors
Taiwan captured the number two spot behind the U.S. in the semiconductor industry with 31 percent of
the respondents recognizing the country as having the top technology in the world. Twenty six percent of
venture capitalists named Japan as having top technology for semiconductors followed by China at 16
“Taiwan has executed tremendously well and has earned its leadership position in the manufacturing of
semiconductors. In addition to excelling in the area of outsourced manufacturing, Taiwan has been very
smart in attracting and growing talent and partnering with leading edge companies in the semiconductor
space,” said Wayne Cantwell, general partner, Crescendo Ventures. “Venture capitalists generally select
Taiwan as the country of choice for manufacturing their portfolio companies’ semiconductors.”
India Ranks High in Software
In the software sector, 41 percent of the venture capitalists surveyed viewed India as having top
technology, placing it second behind the United States. India was followed distantly by the United
Kingdom (13 percent) and Israel (12 percent) as having strong technology in the software space.
“The maturity of the software services industry and availability of talent in the services space is India’s
key strength. In some sense, the cycle of automation that took place in developed geographies in 1990s is
taking place in India now. As the domestic Indian economy expands rapidly, growth in sectors such as
financial services and telecom is creating demand for automation, and creating investment opportunities
around lower price-performance points that are unique to emerging markets,quot; said Alok Mittal, managing
director, Canaan Partners.
United States Viewed as Technological Leader Among Venture capitalists
Venture capitalists from around the world view the United States as having the best technology in all
sectors surveyed. The following represents the percentage of global venture capitalists that named the
U.S as the number one or number two spot in the noted industry sectors:
Telecommunications – 71 percent
Semiconductors – 81 percent
Software – 91 percent
Biopharmaceuticals – 94 percent
Medical Devices – 94 percent
Clean Technology – 79 percent
The National Venture Capital Association (NVCA) represents approximately 480 venture capital and
private equity firms. NVCA's mission is to foster greater understanding of the importance of venture
capital to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2007
Global Insight study, venture-backed companies accounted for 10.4 million jobs and $2.3 trillion in
revenue in the United States in 2006. The NVCA represents the public policy interests of the venture
capital community, strives to maintain high professional standards, provides reliable industry data,
sponsors professional development, and facilitates interaction among its members. For more information
about the NVCA, please visit www.nvca.org.
As used in this document, “Deloitte” means Deloitte LLP. Please see www.deloitte.com/about for a
detailed description of the legal structure of Deloitte LLP and its subsidiaries.