TechCrunch writer Sarah Lacy just wrote an article entitled: “VCs Get Serious about the Emerging World as Deals in India and China Soar“. Before you entrepreneurs in the developing world get too excited, let’s dig into this a little.
On the plus side, VCs often operate with a herd mentality, so the perception that other investors are pouring money into emerging markets may help create actual demand by VCs. It’s also good that blogs like TC are covering emerging markets at list a little bit, instead of not at all.
Unfortunately, most VCs actually are not serious at all about emerging markets. I dug into the Dow Jones report that the TechCrunch article was based on and the news doesn’t look great if you don’t live in China and India. While China had 1/8 the investment of the U.S. in Q1 of 2010, and India had 1/18 of U.S. investment, no other countries or even regions in the developing world are listed. The report breaks the world into only 4 regions: “U.S., Europe, China, Canada, Israel, and India.” What about the rest of Asia, Latin America, and Africa? My guess is that investment there was too small for Dow Jones to put effort into researching. I’ve followed up with Kim Gagliardi and Michael Burns of Dow Jones to ask them.
I’ve also followed up to ask them about the size of investments around the world. According to Sarah Lacy: