Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Venture capital industry goes global

1 August 2006

Venture capital industry goes global

Deloitte survey shows that more than half of venture capitalists around the world are looking to travel, lured by cost savings and diversification.
Following this international trend, local funds also need to travel to maximise returns on their investments.

Deloitte, the professional services firm, today announced findings of an extensive survey into globalisation and the venture capital industry. Key to the survey is the globalisation plans of the industry in contrast with the traditional perception that venture capitalists (VCs) look to invest in local technology developments.

Commenting on the findings, Matt McKendry a Deloitte partner in New Zealand says “There are a number of key factors which have inspired VCs to look beyond their back yards in the larger counties. In Europe, VCs are looking to Asia and Central Europe as lower cost locations and Western Europe for access to quality entrepreneurs and portfolio diversification. The Asia Pacific region is also looking to its own continent to access lower costs, with almost 70% pointing to China and the remainder to India. The popularity of China and India as low cost locations is also mimicked by US VCs. Aside from China and India, the overall findings show, however, that the majority of VCs are taking their first international steps within their own continents.”

This matches the experience of the New Zealand VC market. While the government backed Venture Investment Fund (VIF) has stimulated a more formalised investment market in recent years, there is still little local investment activity from international funds because of the preference to invest closer to home.

The survey also showed that VCs around the world have a similar approach to international growth.

“The survey shows that there will be a growing international interdependence in the VC market, with VCs forming strategic alliances and informal networks around the world. The reasoning behind this is borne out of separate findings which show that the largest perceived barrier to international growth is a lack of local knowledge or expertise. This response tallies with the key finding that 70% of respondents believe strategic alliances will be a key method for globalisation,” says Matt McKendry.

According to McKendry this is a phenomenon also facing the local market.

“The local VC funds need to also form stronger relationships with international investors to help provide a platform for additional investments. The reality is that the local VC funds invest in early staged businesses on the international context.”

“What we think as expansion businesses are generally considered early staged businesses when compared to international data. Therefore, our funds need to establish channels with US, European and Asian investors to create opportunities for our emerging companies in terms of local networks, additional funding and a wider range of realistic exit options,” says Matt Mckendry.

“These international relationships are important to both our local investors as well as enterprises and the research supports this as a global trend.”

Key findings:

- 56% of VCs are expanding their global investment focus – key reasons being access to lower cost locations, diversification of industry and geographical risk and access to quality entrepreneurs;
- 44% are not expanding – key reason being higher quality deal flow in local markets;
- Although the majority of VCs plan to expand internationally, this is not reflected in a change of investment strategy. The majority plan to continue to focus on software investments, communications and networking technologies.


© Scoop Media

Business Headlines | Sci-Tech Headlines


I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>


Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>


Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>


Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news