From 1970 to 2008, venture capital investors have invested 456 billion dollars in more than 27000 companies. The income of these investors was 9.2 trillion dollars in 2008, which is 21% of the US GDP. Moreover, while other industries in the US experienced a negative growth of 1.5% during the recession (2009), venture capital investors enjoyed a 1.6% growth in their income.
From 1970 to 2008, venture capital investors have invested 456 billion dollars in more than 27000 companies. The income of these investors was 9.2 trillion dollars in 2008, which is 21% of the US GDP. This rate of GDP also occurred in the US recession between 2008 and 2010, which shows the economic management power of these institutions.
During the time of US recession (2009), when other industries were experiencing a negative growth of 1.5% in their incomes, the income of venture capital investors increased by 1.6%. Moreover, during those years of recession, while the US was facing unemployment problems and many companies had to dismiss their employees, companies supported by venture capital investors had a lower decrease in the number of their employers. In the companies created by venture capitals, the rate of unemployment was a mere 2%, while in other industries this rate was 3.1%. Before the recession, from 2006 to 2008, the rate of venture capital entrepreneurial employment growth was 8 times more than this rate in other private entities in the US. As depicted in the graph below, the income of these companies was higher than the income of other private companies.
Venture capital investors have earned 10% of their income from all industries in the US, and have created about 12 million jobs in the country.
For each dollar invested in 1970, these entities have earned more than 6 dollars by the end of 2010; and based on 2008 statistics, for each created job, they have spent 37000 dollars.
As shown below, most of the employment and income of these companies were earned by investment in companies within the software industry. Many of these companies are successful start-ups. Another piece of evidence to this claim, is the fact that most of the employment created by investment companies have occurred in the state of California, which is the state that enjoys the highest incomes.
Venture capital investors have invested more than anyone in the US’ silicon-valley.
The graph below illustrates the number of companies that venture capitals have invested in from 1970 to 2010. This graph also shows venture investment in different years.
This atmosphere will influence other companies of course and its signs are already emerging. For example, based on a report on Indian start-ups at the end of 2015, those start-ups that are the main target of venture capital investors have created about 80000 jobs; it is worthwhile to mention that the number of Indian start-ups was about 4200 at the end of 2015.