Greentech, digital entertainment and mobile to see most investment dollars

     in 2009, and Brazil, Russia and Israel gain momentum as attractive

                  investment regions over next five years



    NEW YORK, July 22 /EMWNews/ -- Venture capitalists don't expect to

see a consistent flow of IPOs again until 2010 and report that their firms,

as a result of the slumping US economy and unstable markets, have extended

exit timelines by 12 months or more, according to a recent survey by the

U.S. audit, tax and advisory firm KPMG LLP.



    In polling 297 venture capitalists, corporate buyers, bankers and

entrepreneurs, KPMG found that 79 percent of respondents expect a strong

stream of IPO activity to begin in 2010. Forty percent expect a turnaround

in 2010, 24 percent in 2011 and 15 percent in 2012. Interestingly, only

nine percent think activity will pick up in 2009. And 12 percent don't

think future IPO activity will ever reach historic annual average levels

again.



    When asked which industry will be on the front end of the IPO

turnaround, greentech was the runaway favorite with 44 percent of the

responses, while mobile and the digital entertainment sectors garnered 16

percent and 13 percent of the responses, respectively. KPMG conducted the

survey in collaboration with AlwaysOn, the venture capital new media

organization.



    "There is no question that economic and market conditions have dealt

the IPO market a blow," said Packy Kelly, KPMG partner based in Silicon

Valley and co-leader of its venture capital practice. "These conditions

have led investment firms to hold positions longer, but will not hinder

their appetites to continue to invest in attractive sectors, such as

greentech and mobile, as they anticipate a more attractive IPO market for

these companies in the near future."



    When asked how the slumping economy and unstable market have affected

exit timelines, 67 percent of respondents said their timeline has been

extended by more than 12 months, while 19 percent indicated a delay of six

to 12 months.



    Where is the VC money going?



    When asked to identify the industries that would receive the most

venture funding in 2009, 27 percent indicated greentech, which was followed

by digital entertainment at 23 percent, mobile at 20 percent, and life

sciences at 16 percent. In fact, with regard to greentech investment

specifically, 70 percent of respondents said they expect an increase of 10

percent or more in 2009. With the steep increases in energy prices, it may

come as no surprise that the sectors expected to see the most funding in

2009, according to KPMG survey respondents, are: alternative fuels (39

percent), solar power (22 percent), clean automobiles (14 percent) and wind

power (11 percent).



    The digital entertainment industry will also remain an attractive

investment opportunity for venture capitalists in 2009, and 43 percent of

respondents expect the bulk of the funding to go toward the mobile

applications sector, followed by social media at 25 percent and content

development at 20 percent.



    Venture capitalists also indicated that they expect to see an increase

in sector and geography-specific venture funds next year, similar to those

recently launched by numerous VC firms that focus on greentech, mobile and

China. In fact, 55 percent of respondents indicated that they expect the

number of niche funds to increase by 15 percent or more in 2009.



    In addition to China and India, the KPMG study also found that

investors expect other emerging markets to become attractive venture

capital investment opportunities over the coming years. In fact, 41 percent

of respondents indicated that beyond China and India, Brazil will be the

most attractive market five years from now. Russia (19 percent), Israel (14

percent) and Qatar (9 percent) are also expected to be attractive

investment geographies for venture capitalists five years from now.



    "There is a clear indication that growth investors have become more

global, spreading their capital worldwide," said Brian Hughes, KPMG partner

based in Philadelphia and co-leader of its venture capital practice. "Not

surprisingly, they continue to be bullish on emerging markets and industry

sectors that project the most growth in the near future."



    KPMG LLP, the audit, tax and advisory firm (http://www.us.kpmg.com), is the

U.S. member firm of KPMG International. KPMG International's member firms

have 123,000 professionals, including more than 7,100 partners, in 145

countries.






     Contact:  Manuel Goncalves

               KPMG LLP

               Tel: (201) 307-7735

               [email protected]