Venture capital investments by investee company

Key findings

  • Only a small number of companies are backed by venture capital, and typically represent tiny percentages of total enterprise births in a given year. In most OECD countries, venture capital-backed companies represented less than 1% of enterprise births in 2016.

  • In 2016, the average investment per company exceeded USD 5 million in Canada, Ireland, Israel and the United States, while in the four major Euro area economies, France, Germany, Italy and Spain, it ranged between one and two USD million.

  • Between 2007 and 2016 the share of venture capital investments in companies employing less than 20 employees increased from 30% to 40 % in Europe.

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 or complements traditional bank finance. The development of the venture capital industry is considered an important framework condition to stimulate innovative entrepreneurship.

Definitions

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

Venture capital-backed companies by development stage refers to the percentage share of venture-capital backed companies according to their development stage as harmonised by OECD (Pre-seed/Seed; Start-up/Other early stage; Later stage venture. See Table C.2, Annex C).

The average venture capital investment per company is the ratio between the total venture capital investments in a country and the number of venture capital-backed companies in the country.

The venture capital-backed companies rate is computed as the number of enterprises that received venture capital over 1000 employer enterprise births.

The trend-cycle reflects the combined long-term (trend) and medium-to-long-term (cycle) movements in the original series (see http://stats.oecd.org/glossary/detail.asp?ID=6693).

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

Comparability

There are no standard international definitions of either venture capital or venture capital investments by development stage. 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 research market companies, except for 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, regardless of the location of the private equity firms. Exceptions are Australia, Japan, and Korea where data refer to the location of the investing venture capital firms.

Data for Israel refer only to venture capital-backed high-tech companies. Data for the United States include also venture capital investments done by other investors alongside venture capital firms, but exclude investment deals that are 100% financed by corporations, and/or business angels; also, data refer to the number of deals instead of the number of investee companies. Data for Australia, Japan and New Zealand refer to the fiscal year. Data for Europe includes only venture capital investments (seed, start-up and later stage) by formal fund managers including private equity funds making direct private equity investments, mezzanine private equity funds, co-investment funds or rescue/turnaround funds; investments by business angels, incubators, infrastructure funds, real estate funds, distress debt funds, primary funds-of-funds or secondary funds-of-funds are excluded; the investment amount only captures the equity amount that is invested by formal fund managers and not the value of the entire financing round. Growth capital or buyout investments in current or formerly venture capital-backed companies are also not included.

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. Korea, New Zealand, the Russian Federation and South Africa do not provide breakdowns of venture capital by stage that would allow meaningful international comparisons.

Annex C presents the list of data sources by country; Table C.2 shows the correspondences between original data and OECD harmonised data for venture capital investments by stage.

Source

OECD Entrepreneurship Financing Database.

Further reading

OECD (2017), Financing SMEs and Entrepreneurs 2017: An OECD Scoreboard, OECD Publishing, Paris. http://dx.doi.org/10.1787/fin_sme_ent-2017-en.

OECD (2015), New Approaches to SME and Entrepreneurship Financing: Broadening the Range of Instruments, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264240957-en.

Figure 7.3. Venture capital-backed companies by development stage
Percentage, 2016, or latest available year
picture

 http://dx.doi.org/10.1787/888933564804

Figure 7.4. Average venture capital investments per company
Million US dollars
picture

 http://dx.doi.org/10.1787/888933564823

Figure 7.5. Venture capital-backed companies rate
Per 1000 employer enterprise births
picture

 http://dx.doi.org/10.1787/888933564842

Table 7.2. Number of venture capital-backed companies

Country

2010

2016

Country

2010

2016

Greece

2

0

Italy

77

83

Luxembourg

7

2

Norway

131

88

Slovenia

1

2

Israel (2014)

274

158

Czech Republic

3

9

Finland

159

164

Estonia

15

13

Netherlands

169

204

Latvia

4

23

Australia

176

226

Slovak Republic

11

27

United Kingdom

383

257

Ireland

57

35

Sweden

329

262

Austria

65

38

Spain

258

432

Portugal

44

45

Canada

344

435

Poland

12

46

France

452

621

Denmark

74

64

Germany

991

663

Belgium

49

66

Korea

382

902

Hungary

11

73

United States

4311

6009

Switzerland

87

77

 http://dx.doi.org/10.1787/888933565089

Figure 7.6. Trends of venture capital investments, by size of venture-backed company, Europe
Percentage of all SME venture-capital investments
picture

 http://dx.doi.org/10.1787/888933564861

Figure 7.7. Venture capital investments, Europe
Trend-cycle, 2010 = 100
picture

 http://dx.doi.org/10.1787/888933564880

Figure 7.8. Venture capital investments, United States
Trend-cycle, 2010 = 100
picture

 http://dx.doi.org/10.1787/888933564899