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Transition - Global Venture Capital Insights Report 200605/07/2006. Source: Ernst & Young. Gil Forer and Adj. Prof. Dr. Martin Haemmig 
 The last year marked a period of transition in the global venture capital industry, says Ernst & Young, as important developments in all the major markets signaled a passage into a new venture landscape. In the mature markets of North America, Europe, and Israel, this transition was expressed in the increased globalisation of venture capital funds and venture-backed companies, changes in the regulatory landscape that have altered the operational assumptions of both funds and portfolio companies, and challenging capital markets.
The convergence of globalization, Web 2.0, and media, as well as cross-innovation between IT and life sciences are further indications that the venture capital industry is operating in a new environment.
The emerging markets of China and India moved into a new phase in their development as venture capital hotbeds last year. In China, venture-backed companies launched a second wave of successful IPOs on NASDAQ, the first year of fundraising for China-dedicated funds concluded with US$4 billion in committed capital, and foreign venture capitalists advanced the deployment of various operating models. India saw increased investments by foreign venture capitalists, the continuing development of an important domestic consumer market, and significant announcements of planned investments by Intel, Cisco, and Microsoft.
In 2005 the global investment activity sustained the momentum that developed in 2004 with about US$31 billion invested across the globe. At the same time, venture capital firms stockpiled the most investment capital since 2001 through new fundraising activity. Clean-tech, Web 2.0, medical technologies, and wireless applications received growing investment. Mergers and acquisitions and initial public offerings by venture-backed companies also showed continued strength during this period, setting the stage for continuing investment in 2006.
Our fourth annual global report provides insight into global venture capital investments, the venture-backed exit landscape, the state of the pool of privately held venture-backed companies and venture capital investors, the policy landscape, Web 2.0, and the outlook of global limited partners. Throughout the report, partners from some of the top venture capital firms around the globe share their own perspectives on the lessons of the past year and what lies ahead - we are grateful for their contributions.
We hope you find this report useful and we look forward to working together with you on the global challenges and opportunities that lie ahead.
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Authors: Gil Forer (E&Y--VCAG) and Adj. Prof. Dr. Martin Haemmig (CeTIM -- Center for Technology & Innovation Management)
Ernst & Young, one of the world's leading professional services organisations, helps companies across the globe to identify and capitalise on business opportunities. For more information, please visit http://www.eyonline.com/growth
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