U.S. Startups Lack Interest From Foreign VCs

team meetingIn an interesting global development, it seems that venture capital is no longer flooding into the U.S. as it used to, and VCs are looking to distant shores to make their mark. Cities such as Tel Aviv, Berlin, and Mumbai seem to be hotting up the VC presses. The U.S., however, has dropped its share of the global VC investment pool from 95% in the early 90s to 50% today. But this is not the end of the line for American startups, as internal funding seems to pick up the slack. But are foreign markets still interested in U.S. startups?

Europe Joins The Unicorn Race

Early stage startups, commonly referred to as unicorns, are not only popping in droves, but also seem to be putting quite a bit of pressure on their U.S. counterparts. While Europe hasn’t surpassed U.S. investment as of yet, they are certainly starting to gain significant ground with investments totaling $106 billion compared to the $136 billion for the U.S. These are not solely early stage startups, but investments in existing companies as well. Companies such as Zoopla, Spotify, and Farfetch lead the long list of exciting business ventures to get involved in.

The Year Of The Red Unicorns

One of the biggest reasons the U.S. is seeing such a substantial drop in venture capital investment is due to a large investment in Chinese startups. These early-stage startups have raised close to US$56 billion, compared to the US$42 billion raised by the Americans. It doesn’t help the U.S. based startups that five of the ten most valuable unicorns are based in China, which makes the nation hard to compete with on a global scale.

With tension hotting up between the U.S. and China, the rivalry will undoubtedly spark up serious competition. For the U.S., this means gaining ground against China by ensuring that their businesses are investible by ensuring the right jockeys are in place. It may also mean some government intervention to fund new tech or medical initiatives to remain competitive in an ever-increasing finance pool.

Qatar Alleviates International VC Suspense With U.S. Interest

Qatar’s Sovereign Wealth Fund is casting a net over the long list of American startups and VC deals are already on the table. The Qatar Investment Authority has already invested in companies such as Foursquare Labs Inc. and Grail Inc., although the exact dates and amounts have not been disclosed. Tech and medicine startups seem to be the top choices. But QIA has also stepped out of their comfort zone before by investing $100 million in Uber, a diversification risk that seems to have paid off. The biggest question is whether the interest from Qatar will spark interest from other investors too.

While things might be cooling down for the U.S. from a venture capital perspective, there is still plenty to look forward to. With Qatar seemingly the only investor biting, the U.S. may have to look internally for funding to stay in the game.

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