The much celebrated Just Dial and Redbus exits aside, is the Indian startup market as irresistible a draw as perceived for venture capitalists? The 2013 Global Venture Capital Confidence Survey, undertaken by Deloitte and the National Venture Capital Association, suggests otherwise. While the United States, the world’s largest venture capital market, has seen global investor confidence increase, confidence levels in emerging markets such as China, Brazil and India have declined.
Participants in the survey rated Brazil at 3.33 (down 22 basis points), China at 3.26 (down 19 basis points) and India at 3.17 (down 7 basis points). The survey notes that challenges with infrastructure, legal and policy restrictions among other growing pains in the emerging markets contributed to the shift in enthusiasm for investing in the United States.
The annual survey, now in its ninth edition, was conducted in May and June of 2013 and gauged confidence levels of 403 venture capital, private equity and growth equity investors in the Americas, Europe, Asia Pacific and Israel. 65 per cent of the respondents were from non-US countries and early stage of venture capital investors consisted of 67 per cent of the respondents. Confidence levels were measured on a scale of 1-5 (a score of 5 denotes the most confidence).
The Indian venture capital industry, which committed investments worth more than $1 billion in 2012, largely consists of firms that are either local arms of US-based firms or raise their funds primarily from US-based limited partners (institutions that invest in venture capital firms). The dampening of global investor confidence in the Indian market could be an early wake-up call for startups.
Graphs credit: Deloitte NVCA 2013 Global Venture Capital Confidence Survey.
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(c) StartupCentral 2013