VC investors choose cloud computing, mobile tech

The annual Global Venture Capital Confidence survey shows investors are increasingly interested in throwing down money for technology companies.

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Overall confidence in venture capital investing by sector. Deloitte/National Venture Capital Association

Venture capital investor confidence is on the up and up, and they're setting their sights on the tech world, according to a new survey by the National Venture Capital Association and Deloitte.

The two firms released the results of their annual Global Venture Capital Confidence survey on Wednesday, which shows that investors are increasingly being drawn to top categories in the tech industry, including cloud computing, mobile tech, and robotics.

"It's very positive results on the market overall, and very positive on tech," Jim Atwell, national managing partner for Deloitte's Emerging Growth Company, told CNET. "Tech companies are the sectors that have the most confidence the most excitement around them."

For the report, NVCA and Deloitte surveyed more than 300 venture capitalists from around the world in May and June of this year about their confidence on global investments and certain markets and industries. The survey shows that investor confidence has risen for the last three years in a row; the firms attribute this to favorable capital markets, many investment opportunities, and a strong investor climate.

The category that won the highest global investor confidence was cloud computing, which earned a 4.11 ranking on a scale of 1 to 5. Atwell said cloud computing appeals to investors because it requires less capital to build.

"It's the low cost of capital to build a product and the ability to license it over and over again," Atwell said. "It's a business model that's very attractive to the industry."

Following closely behind cloud computing was mobile technology with a 4.02 ranking; and third was health IT and services with a 3.94 ranking. Other high-ranking categories included enterprise software, consumer software, new media/social networking, and robotics. In fact, six of the top seven categories were in tech.

Some categories, like robotics, saw skyrocketing confidence. "Robotics have been around for a long time and here we go with a 14 percent increase in just one year," Atwell said.

Besides strong confidence in tech, investors also gave a thumbs up to the US. For the first time ever, a country has ranked higher than 4 on the 5-point scale. In the survey, the US rated 4.03 for the best country to invest in, second was Israel with 3.71, and third was Canada with 3.48. According to Thomson Reuters and NVCA, more funds were raised in the US in the second quarter of this year than any other quarter since 2007 -- the total was $7.4 billion in new commitments from 78 funds.

While there was high confidence in the US, VC investors' confidence in US government policymaking dropped, according to the survey. In fact, the US now rates as the lowest among countries surveyed this year for government policymaking. According to Atwell, low confidence in government policymaking centers on legal immigration reform, tax reform, and patent reform.

"The stalemate in Washington has brought the lowest confidence levels," Atwell said.

 

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