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Entrepreneurship at a Glance
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branch 6. Determinants of entrepreneurship: selected indicators
  branch Access to finance: Venture capital

Key facts

  • In the majority of countries for which data are available, venture capital investments represent a very small percentage of GDP, e.g. often less than 0.03%. Exceptions are Israel and the United States, where the venture capital industry is more mature and represents 0.5% and 0.2% of GDP respectively.
  • The crisis has severely affected the venture capital industry. In 2012, in most countries the level of venture capital investments was around 60% 2007 levels. In Ireland and Luxembourg however investments made in 2012 exceeded pre-crisis levels.
  • In 2012, in the United States, 40% of venture capital investments were in the life sciences sector, while in Europe this share was 30%. Investments predominantly target companies in their start-up phase, followed by later-stage ventures; and only a very small number of companies are backed by ventur capital.

Relevance

Venture capital is a form of equity financing particularly important for young companies with innovation and growth potential but untested business models and no track record; it replaces and/or complements traditional bank finance. The development of the venture capital industry is considered as part of the framework conditions to stimulate innovative entrepreneurship.

Definitions

Venture capital is a subset of private equity (i.e. equity capital provided to enterprises not quoted on a stock market) and refers to equity investments made to support the pre-launch, launch and early stage development phases of a business (Source: EVCA, European Private Equity and Venture Capital Association).

Venture capital backed companies (portfolio companies) are new or young enterprises that are (partially or totally) financed by venture capital.

The venture capital backed companies rate is computed as the number of enterprises that received venture capital in year t over 1000 active enterprises in year t.

Nordic countries include Denmark, Finland, Norway and Sweden (Figure 6.13).

 

Comparability

There are no standard international definitions of venture capital nor of the breakdown of venture capital investments by stage of development. In addition the methodology for data collection differs across countries.

Data on venture capital are drawn mainly from national or regional venture capital associations that produce them, in some cases with the support of commercial data providers, except in Australia, where the Australian Bureau of Statistics collects and publishes statistics on venture capital.

The statistics presented correspond to the aggregation of investment data according to the location of the portfolio companies (i.e. the investee companies), regardless of the location of the private equity firms. Exceptions are Australia, Korea and Japan where data refer to the location of the investing venture capital firms.

In the OECD Entrepreneurship Financing Database venture capital is made up of the sum of early stage (including pre-seed, seed, start-up and other early stage) and later stage venture capital. As there are no harmonised definitions of venture capital stages across venture capital associations and other data providers, original data have been re-aggregated to fit the OECD classification of venture capital by stages; see Annex . Korea, New Zealand, the Russian Federation and South Africa do not provide breakdowns of venture capital by stage that would allow meaningful international comparisons.

Data on venture capital investments by sector are also the result of a reclassification of original data into five sectors, namely: Computer and consumer electronics; Communications; Life science; Industrial/energy; and Others.

In Figure 6.15, percentages for the United States relate to the number of investment deals in 2011 by development stage.

Annex  presents correspondence tables between original data and OECD harmonised data for venture capital investments by stage and sector. Readers should be aware that in the field of venture capital measurement the margin for improvements of international comparability is important.

Sources/Online databases

OECD Entrepreneurship Financing Database, drawing from:

Information on data for Israel: http://dx.doi.org/10.1787/888932315602.

Indicator in PDF Acrobat PDF page

Table
6.1. Venture capital investments by country
    Table in Excel

Figures
6.9 Venture capital investments as a percentage of GDP (US dollars) Figure in Excel
Venture capital investments as a percentage of GDP (US dollars)
6.10 Trends in venture capital investments Figure in Excel
Trends in venture capital investments
6.11 Venture capital investments by sector, United States Figure in Excel
Venture capital investments by sector, United States
6.12 Venture capital investments by sector, Europe Figure in Excel
Venture capital investments by sector, Europe
6.13 Venture capital investments by sector, selected European countries Figure in Excel
Venture capital investments by sector, selected European countries
6.14 Venture capital investments by sector Figure in Excel
Venture capital investments by sector
6.15 Venture capital backed companies by development stage Figure in Excel
Venture capital backed companies by development stage
6.16 Venture capital backed companies rate Figure in Excel
Venture capital backed companies rate