Cloud computing is the strongest technology investment sector for the third year in a row.
Biopharmaceuticals and robotics are the two sectors that have gained the greatest venture capital confidence from 2014 to 2015.
U.S. technology hubs (Silicon Valley/San Francisco, New York, Boston, Los Angeles & Chicago), Israel and Canada dominate while confidence continues to fall in Brazil and other emerging markets.
These and other insights are from Deloitte’s 2015 Global Venture Capital Confidence Survey. You can download a copy here (PDF, no opt-in, 70 pp.). Deloitte has also produced and made available infographics of the key findings here (PDF, no opt-in, 4 pp.). Deloitte & Touche LLP and the National Venture Capital Association (NVCA) collaborated on the eleventh annual survey, which was conducted in May & June of this year. The study assesses investor confidence in the global venture capital environment, market factors shaping industries and investments on specific geographies and industry sectors. Please see page 4 of the study for a description of the methodology.
Key take-aways include the following:
Global venture capital investors are most confident in cloud computing (4.18). Investors were asked to rate their confidence level in each sector. Confidence levels were measured on a scale of 1 to 5, with 5 representing the most confidence. Basis points indicate year-over-year changes. Mobile (4.05), Internet of Things (3.95) and enterprise software (3.82) are the top four sectors venture capitalists are the most confident in today. Biopharmaceuticals are experiencing the greatest increase in venture capital confidence today. Please the the graphic below for additional details.
The United States (4.17), Israel (3.90) and Canada (3.60) dominate venture capital investors’ confidence while emerging markets including Brazil continues to fall. U.S. technology hubs including Silicon Valley/San Francisco, New York, Boston, Los Angeles and Chicago continue to retain and reinforce global venture capital investor confidence. The following graphic illustrates global venture capital investor’s confidence by nation.
Silicon Valley/San Francisco (4.28), New York (3.86) and Boston (3.77) are the top three U.S. metros global venture capital investors have the greatest confidence in. Los Angeles (3.43) and Chicago (3.22) are the fourth and fifth most trusted U.S. metros that venture capitalists have confidence in. $15.2B was invested by global venture capital investors in Silicon Valley/San Francisco according to the Deloitte study. The following graphic compares venture capitalist confidence levels and venture capital investment dollars received in 2015 through Q2.
Immigration reform (61%) and patent demand reform (36%) are the top two initiatives U.S.-based venture capitalists want addressed by policy leaders. For non-U.S. venture capitalists, tax incentives/credits (50%), infrastructure and job creation (both 41%) are the top two initiatives they would like to see public policy leaders take on in their home country.
Cloud computing continues across all sectors as the area global venture capital investors have the greatest confidence in. Confidence in biopharmaceuticals grew the fastest of any sector measured by the survey between 2014 and 2015, and this is the first year Deloitte is tracking investor confidence in the Internet of Things (IoT). A sector comparison is provided below.
Global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels. A Goldman Sachs study published earlier this year projects that spending on cloud computing infrastructure and platforms will grow at a 30% CAGR from 2013 through 2018 compared with 5% growth for the overall enterprise IT.
Centaur Partners and other firms mentioned in this roundup are seeing more enterprise-size deals for cloud computing infrastructure and applications. While each of these consultancies and research firms have varying forecasts for the next few years, all agree that cloud computing adoption is accelerating in enterprises on a global scale.
Key take-aways from the roundup are provided below:
By 2018, 59% of the total cloud workloads will be Software-as-a-Service (SaaS) workloads, up from 41% in 2013. Cisco is predicting that by 2018, 28% of the total cloud workloads will be Infrastructure-as-a-Service (IaaS) workloads down from 44% in 2013. 13% of the total cloud workloads will be Platform-as-a-Service (PaaS) workloads in 2018, down from 15% in 2013. The following graphic provides a comparative analysis of IaaS, PaaS and SaaS forecasts from 2013 to 2018. Source: Cisco Global Cloud Index: Forecast and Methodology, 2013–2018. (PDF, free, no opt-in).
Centaur Partners’ analysis of SaaS & cloud-based business application services revenue forecasts the market growing from $13.5B in 2011 to $32.8B in 2016, attaining a 19.5% CAGR. Centaur provides a useful overview of current market conditions including M&A activity in their latest market overview published this month, Introduction to Centaur Partners: SaaS Market Overview, (PDF, free, no opt-in).
Global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels. Spending on integration, storage management, and database management systems are projected to experience the greatest growth in 2015. These and other key insights are from Forrester’s SaaS software subscription revenue by category show below. Source: Enterprise software spend to reach $620 billion in 2015: Forrester.
$78.43B in SaaS revenue will be generated in 2015, increasing to $132.57 in 2020, attaining a compound annual growth rate (CAGR) of 9.14%. The following graphic and table provides an overview of Forrester’s Global Public Cloud Computing market size analysis and forecast for the years 2011 to 2020. Source: Institut Sage.
IDC predicts that by 2016, there will be an 11% shift of IT budget away from traditional in-house IT delivery, toward various versions of cloud computing as a new delivery model. By 2017, 35% of new applications will use cloud-enabled, continuous delivery and enabled by faster DevOps life cycles to streamline rollout of new features and business innovation. Source: 2015-2017 Forecast: Cloud Computing to Skyrocket, Rule IT Delivery.
By 2018, IDC forecasts that public cloud spending will more than double to $127.5 billion. This forecast is broken down as follows: $82.7 billion in SaaS spending, $24.6 billion for IaaS and $20.3 billion in PaaS expenditures. Source: Forecasts Call For Cloud Burst Through 2018.
By 2016 over 80% of enterprises globally will using IaaS, with investments in private cloud computing showing the greater growth. Ovum forecasts that by 2016, 75% of EMEA-based enterprises will be using IaaS. These and other insights are from the presentation, The Role of Cloud in IT Modernisation: The DevOps Challenge (free PDF, no opt in). The graphic below provides an analysis of cloud computing adoption in EMEA and globally.
By 2018, more than 60% of enterprises will have at least half of their infrastructure on cloud-based platforms. These and other are insights are from the keynote Cloud Business Summit presentation Digital Business, Rethinking Fundamentals by Bill McNee, Founder and CEO, Saugatuck Technology. Source: Digital Business, Rethinking Fundamentals.