Tomo VI. fascículo 4, octubre-diciem- octubre-diciem-bre 1950
Y, por último, se termina diciendo que la Ley de poder general tiene unos
VI) HISTORIA POLÍTICA
For all the benefits of overseas investing, VC firms encounter a variety of risks and challenges abroad.
Both U.S. and non-U.S. firms perceive the U.S. as the country where the cost of complying with regulation is too high. In fact, the percentage of non-U.S. respondents who indicated this as a concern leaped from 28 percent last year to 41 percent this year. Globally, four percent more, 44 percent, saw this issue as a concern. Forty-six percent of U.S. respondents believe the cost of complying with corporate governance is too high.
Figure 57. Top locations where the cost of complying with corporate governance regulation is too high (all respondents)
Global U.S.
Non-U.S.
8% 5% 5% 4% 3% 3% 3% 3%
9% 9%
5% 3% 5% 5% 3% 2%
41%
5% 2% 5% 5%
2% 2% 4%
44%
7%
46%
7% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
U.S. UK & Ireland Canada India Austria, Germany, Liechtenstein,
Switzerland
Israel China Nordic
Countries France, Italy, Monaco, Portugal, Spain
Benelux 7%
The ongoing debate in the U.S. over regulatory issues and the resulting press coverage, may be contributing to the tremendous increase of non-U.S. respondents’ attitudes that the U.S. regulatory environment is too costly.
Another significant issue regarding the U.S. is the perception that the litigation environment creates additional financial risk. Globally, 35 percent of respondents cited this as a problem for the U.S., compared with 46 percent last year.
Among non-U.S. respondents the number is also down from 36 percent last year to 25 percent this year. And, among U.S. respondents the number was 58 percent, down from last year’s 70 percent. The drop in the percentage of all respondents to the perception of this issue as a challenge, may reflect the overall slow down in corporate litigation.
Given the above, it is important to note that no other
impediments were significant when investors considered the U.S.
Figure 58. Top locations where litigation environment creates additional financial risk (all respondents)
35%
10% 8% 8% 7% 7% 5% 4% 3% 2%
58%
3% 3%
0%
6% 6%
3% 3% 6%
25%
13% 10% 12%
7% 7% 6% 4% 4%
0%
10%
20%
30%
40%
50%
60%
70%
U.S. Central &
Eastern Europe
Israel China Latin America India CIS & Russia Nordic
Countries Canada Africa
Global U.S.
Non-U.S.
0% 0%
Figure 59. Impediments to investing in the United States (APAC, Europe and U.S. respondents)
4% 3% 4%
7%
12%
3% 4% 4%
1% 3%
1% 1% 1%
9%
2% 4%
10%
7% 8%
5%
1% 1% 1% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
3%
9%
11%
0%
10%
20%
30%
40%
Difficulty in achieving successful exits
Lack of quality deals that fit
investment profile
Lack of experienced local investors
Lack of talented portfolio management
team
Lack of skilled workers Unstable
economy Unstable political environment
Exchange
rate risk Intellectual property laws Tax
environment Litigation
environment Regulatory environment
APAC Europe U.S.
While this report focuses on the larger geographical regions in which the most venture capital activity is taking place (and the most responses were received), it is important to also discuss two countries outside of those regions in which there has been significant interest – Canada and Israel.
Canada has grabbed the attention of 11 percent of U.S. VCs as a primary country of expansion (although it did not show up at all in responses from non-U.S. investors). In fact, where the U.S. is concerned, it lags only behind China and India.
In addition to the historical reasons why Canada has been attractive to U.S. VCs (primarily geographic proximity and political/economic stability), survey responders also highlighted lower costs, lower regulatory compliance and legal costs than the U.S. In fact, none identified Canada as having a litigation
environment that created additional financial risk. And Canada was viewed as safer than China, India, and Israel.
When it comes to investing in Canada, the only significant drawback identified was its perceived unfavorable tax environment. Forty percent of U.S. respondents and 43 percent of America’s respondents (excluding the U.S.) cited Canada’s tax laws as an issue. However, only six percent of APAC, respondents and five percent of European respondents were troubled by this. On the other hand, Canada was not seen as having some of the negatives as the U.S., such as the cost of complying with corporate governance or the litigation environment, or perceived barriers of other countries, such as weak intellectual property laws and lax regulation.
Figure 60. Top locations with an unfavorable tax environment (all respondents)
Global U.S.
Non-U.S.
28%
12% 9%
7% 7% 6% 5%
0%
4%
40%
8% 8% 7%
4% 7%
4% 4%
11% 8% 11% 9%
5% 4%
6% 5% 5% 7% 5%
16%
16%
0%
10%
20%
30%
40%
50%
60%
Canada Austria, Germany, Liechtenstein,
Switzerland
Nordic Countries India France, Italy, Monaco, Portugal, Spain
UK & Ireland Israel China U.S. Australia/New Zealand
Israel has also drawn the interest of U.S. VCs, although less than countries like Canada. It can claim six percent of U.S.
respondents that consider it a primary country of expansion.
Only two percent of European respondents consider Israel of interest and it did not show up among APAC countries.
Among those interested in investing in Israel, the primary reason for expanding there was due to higher quality deal flow. As Israel has its own venture capital community, it appears that new foreign investment interest is less significant.
Among the challenges Israel faces in attracting U.S. investors, however, is a perceived lack of talented portfolio management teams. Also cited as significant impediments were difficulty in achieving successful exits, a lack of quality deals, personal safety and security concerns, and an unstable political environment.
For Canadian venture capitalists, 44 percent of respondents are currently investing abroad, some of which is being done through investing in local companies with operations in foreign countries. Forty-four percent of Canadian respondents have between one and ten percent of their investments in companies that have significant operations in another country, another 22 percent have between 11 and 25 percent, and 19 percent have between 26 and 50 percent located abroad.
Among Israeli VCs, only 29 percent are engaged in investments outside of home.
Of those Canadians who are involved in foreign investing, 75 percent invest only with other investors who have a local presence, while 58 percent develop strategic alliances with foreign-based firms. And, 50 percent require their partners to travel more to manage their investments. Among Israeli VCs, the options they choose for managing their foreign investments are equally split among developing strategic alliances with foreign-based firms, requiring partners to travel more, relocating the headquarters of portfolio companies to be closer to the investment firm, hiring investment staff with expertise in the target country or region and investing in local portfolio companies with significant operations outside of Israel. And, while 78 percent of those Canadian VCs plan to expand their investment activities over the next five years, only 20 percent of Israelis intend to expand.