Article 394: Venture Capital in the USA and Global Investment
Article 394: Venture Capital in the USA and Global Investment
Hasan Yahya, Ph.Ds, Professor of Sociology
Venture capital (VC) is financial capital provided to early-stage, high-potential, growth start-up companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnologies, , IT, Health and IT and software.
The typical venture capital investment occurs after the seed funding round as growth funding round (also referred as Series A round)) in the interest of generating a return through an eventual realization event, such as an IPO or or trade sale of the company.
Venture capital is also associated with job creation (accounting for 21% of US GDP), the knowledge economy, and used as a proxy measure of innovation within an economic sector or geography. Every year there are nearly 2 million business created in the USA, and only 600-800 get venture capital funding. According to the National Venture Capital Association 11% of private sector jobs come from venture backed companies and venture backed revenue accounts for 21% of US GDP.
Other options for Venture Capital, angel investment (AI) and other seed funding, VC is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company's ownership (and consequently value).
Venture Capital Associations and enterprises in the U.S. for example is 1,160, ranked first in the list. Canada is the second with 408 Venture Capital. The United Kingdom comes third with 226 firms then Germany forth with 140. France fifth with 100 and Switzerland sixth with 73. Worldwide, other fifty countries has venture Capital between one and 31 firms in each.
In terms of Muslim countries comes Turkey first with 6 firms, Malasia with 5, and Egypt, Saudi Arabia, and Pakistan with only one Venture Capital firms. (371 words) www.askdryahya.com
Sources:
- http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103
- Venture Impact (5 ed.). IHS Global Insight. 2009. p.2.
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