VENTURE IMPACT 200
4


VENTURE CAPITAL BENEFITS TO THE U.S. ECONOMY 



CONTENTS 

Executive Summary 

What Is Venture Capital? 

Venture Capital Backed Companies Boost America.s Economic Strength 

Venture Capital Backed Companies Create Jobs 

Venture Capital Backed Companies Drive Sales 

Venture Capital Backed Company Wages Grow Faster Than National Average 

Venture Capital Supports Employment Across the Country 

Venture Capital Supports Sales Across the Country 

Venture Capital Shifts Mix of U.S. R&D to Smaller Firms 

Venture Capital Spurred the High-Tech Productivity Boom of the 1990s 10 
Venture Capital Fuels the Birth of New Publicly Traded Companies 11 
Venture Capital Supports U.S. Global Competitiveness 12 
Methodology 13 

About Global Insight 

Global Insight, Inc. is a privately held company formed to bring 
together the two most respected economic analysis, forecasting, and 
financial information companies in the world, DRI and WEFA. Global 
Insight provides the most comprehensive economic coverage of 
countries, regions, and industries available, using a unique combination 
of expertise, models, data, and software within a common analytical 
framework to support planning, and decision-making. Global Insight 
collects and delivers economic and financial information to clients and 
also provides a broad range of consulting capabilities. 

With its April 2003 acquisition of World Markets Research Centre, 
Global Insight also provides the world.s first same-day analysis and risk 
assessment service covering 196 countries and 4 industries, providing 
insightful analysis of market conditions and key events around the world. 
The company has over 3,300 clients in industry, finance, and government 
with revenues in excess of $70 million, over 600 employees and 23 
offices in 12 countries covering North and South America, Europe, Africa, 
the Middle East, and Asia. For more information about Global Insight, 
visit www.globalinsight.com. 


EXECUTIVE SUMMARY 

This report provides an overview of the findings contained in the Global 
Insight study, Venture Impact 2004:  Venture Capital Benefits to the U.S. 
Economy, commissioned by the National Venture Capital Association 
(NVCA). The venture capital contribution to U.S. jobs, economic growth, 
and technological progress has climbed steadily over the last three years. 
The most recent data show that venture capital continued to play a 
paramount role in nourishing the U.S. economy by bringing concepts and 
business models to life. 

Boosts America.s Economic Strength and Creates Jobs 

Venture capital backed companies employed more than 10 million 
American workers and generated $1.8 trillion in sales in 2003. 

Outperforms Other Companies 

Venture capital backed companies outperformed their nonventured 
counterparts in job creation and sales growth between 2000 and 2003. 
Employment in venture backed companies jumped by 6.5 percent, while 
national private sector employment shrank by 2.3 percent. Venture 
backed company sales grew by nearly 12 percent, compared to an overall 
rise in U.S. company sales of 6.5 percent. 

Sustains Employment Growth in Most Industry Sectors 

Venture backed companies added jobs in all but two of ten major 
industry sectors. In particular, strong employment gains were recorded in 
the heavily ventured medical sectors between 2000 and 2003. 

Supports Growth of .Breeder. Industries 

Venture backed .breeder. industries with a heavy emphasis on 
research and development, like biotechnology and healthcare products, 
have made great employment gains since 2000. 

Contributes to Economic Health of State Economies 

California, Texas, Massachusetts, Pennsylvania, and Georgia are 
the top national job creators measured by venture backed companies 
headquartered in their state. 

Underpins Leading-Edge Research and Development 

Venture backed firms are the national leaders in research and 
development. The mix of U.S. R&D is shifting toward smaller firms in the 
leading-edge biotechnology, medical research, and high-technology 
industries. 

ECONOMIC BENEFITS OF VENTURE
CAPITAL BACKED COMPANIES 


2000 2003 

Jobs 9.5 Million 10.1 Million 

Sales $1.6 Trillion $1.8 Trillion 

2000 - 2003 Growth 

Job Growth +6.5% 

Sales Growth +11.6% 

Note: Data are rounded 

TOP FIVE STATES BY
EMPLOYMENT AT VENTURE
CAPITAL BACKED FIRMS
HEADQUARTERED
IN THE STATE
2003


Employment at 
Rank State VC Backed Firms 

1 California 2,470,900 
2 Texas 899,200 
3 Massachusetts 712,300 
4 Pennsylvania 604,000 
5 Georgia 551,400 


WHAT IS VENTURE CAPITAL?


PROMINENT VENTURE BACKED
COMPANIES 


. 
Intel 
. 
Microsoft 
. 
Amgen 
. 
Medtronic 
. 
The Home Depot 
. 
eBay 
. 
JetBlue 

Venture capital addresses the funding needs of entrepreneurial 
companies that generally do not have the size, assets, and operating 
histories necessary to obtain capital from more traditional sources, such 
as public markets and banks. 

Far from being simply passive financiers, venture capitalists 
foster growth in companies through their hands-on involvement in the 
management, strategic marketing, and planning of their portfolio 
companies. Venture capitalists invest alongside management and 
employees through equity financing and the practice of using stock 
option plans to motivate all workers. They are entrepreneurs first and 
financiers second. 

As equity owners and board members, venture capitalists 
succeed when the portfolio company succeeds. Successful venture 
capitalists will readily point out that many of their most successful 
companies ended up with a business or product model that was quite 
different from the original business plan. This morphing of a business 
from a fledgling start-up to a successful company is the key role of the 
venture capitalist. 

Venture capital firms generally are private partnerships or closely 
held corporations funded by private and public pension funds, endowment funds, foundations, corporations, wealthy individuals, foreign 
investors, and the venture capitalists themselves. 

When an investment is made, a percentage ownership in the 
company is given to the venture fund in exchange for the capital 
provided. The expectation is that at least some of the investments will 
prove to be extremely profitable even if others eventually fail. Typical 
exits for successful investments include sale to public markets through 
an initial public offering (IPO) or acquisition by a larger company. 

Although the venture capital industry has become much more 
visible in the past few years, it has been building companies for several 
decades. From 1970 through 2003, the industry invested $338.5 billion 
in 26,494 companies. 

Venture Capital.s Business Cycle 

Venture capital is a cyclical business, subject not only to internal 
dynamics, but to the influence of external economic sources and to 
fluctuations in financial markets. Indeed, the data show that ventured 
firms increased their size and share in the economy over the last three 
years, despite the dot-com bust and high-tech equipment sales 
downturn. Venture supported firms showed continued solid progress. 


VENTURE CAPITAL BACKED COMPANIES 
BOOST AMERICA.S ECONOMIC STRENGTH 

The Venture Capital Sector Has Grown To Become a Major Force in 

the U.S. Economy 

Venture capital funded companies are an integral part of the 
American economy. The dollars and cents contribution of the venture 
capital industry goes well beyond the objective economic contribution. 
It continually reinforces America.s entrepreneurial spirit. And in so 
doing, the venture capital industry becomes a catalyst for change. 
Venture capitalists, many of whom are successful former entrepreneurs 
themselves, shepherd new business men and women to reach their full 
potential. 

Venture capital funded companies were directly responsible for 
more than 10 million jobs and $1.8 trillion in sales in 2003. This corresponds to 9.4 percent of total U.S. private sector employment and 9.6 
percent of company sales. This is impressive given that venture investment was less than two percent of total equity investment for most of 
the past 34 years. 

Venture Capital Backed Firms Outperform Other Companies 

Venture backed firms added some 600,000 net jobs to the U.S. 
economy between 2000 and 2003. Venture supported firms such as 
ebay, Google, and JetBlue are just three examples of the many 
successful ventured businesses that have hired hundreds of new 
employees over the last three years. 

VENTURE CAPITAL BACKED COMPANIES CREATE JOBS AND WEALTH 

Employment by Venture Capital Sales by Venture Capital 
Backed Companies Backed Companies 
2003 2003 
(in millions) (in trillions) 
+12% 
+6.5% +$212 billion in sales 
+600,000 jobs 

Employment at Venture Capital Backed
Companies as a Percent of Total
Workforce
2003



Sales at Venture Capital Backed
Companies as a Percent of All Sales
2003




EMPLOYMENT AT SELECT
VENTURE BACKED FIRMS 
2003


Company Employment 
Seagate 10,000 
Google 1,600 
eBay 6,200 
The Home Depot 299,000 

Source: Hoovers.com 

Venture Capital Employment Growth
vs. Total Employment Growth
2000 - 2003



VENTURE CAPITAL BACKED
COMPANIES CREATE JOBS


Venture capital backed firms create jobs at a significantly faster 
rate than their nonventured counterparts. Venture backed firms 
increased their employment base by 6.5 percent between 2000 and 
2003, while overall total private sector employment dropped by 2.3 
percent during the same time period. The Global Insight analysis 
shows that ventured firms were only mildly impacted by the recession. 

The venture capital job creating engine is not limited to one 
segment of the economy. It permeates the entire American economy. 
Global Insight examined 10 major industry sectors and found 
employment gains in all but two of these sectors for venture capital 
backed companies. Ventured companies in biotechnology posted an 
employment gain of 23 percent and healthcare products grew by 16 
percent between 2000 and 2003. Only two industry sectors -
-
computer 
hardware and services and semiconductors -
-
experienced net job 
losses for venture backed firms between 2000 and 2003. 

Not only did ventured firms grow faster than their national 
industry counterparts, but sectors with a higher concentration of venture 
capital financing experienced higher employment growth differentials. 
The best example is the computer software industry, where venture 
backed firms employ 88 percent of all computer software workers. 
Venture backed firms grew by 17 percent, while the industry as a whole 
declined by nearly 8 percent. 

EMPLOYMENT GROWTH AT VENTURE CAPITAL BACKED COMPANIES
VS. TOTAL EMPLOYMENT GROWTH
BY INDUSTRY SECTOR 
2000 - 2003


VC Employment Total Employment 
Industry Growth Growth 
Biotechnology 23% 5% 
Business/Financial 4% -1% 
Communications 5% -18% 
Computer Hardware and Services -1% -14% 
Computer Software 17% -8% 
Healthcare Products 16% -2% 
Healthcare Services 10% 9% 
Industrial/Energy 1% -9% 
Retailing and Media 12% -1% 
Semiconductors -10% -26% 
Total 7% -2% 


VENTURE CAPITAL BACKED COMPANIES 
DRIVE SALES 

Venture capital backed firms outperformed the national 
economy in overall sales growth. Sales at venture backed firms grew 
by 11.6 percent between 2000 and 2003, compared to an overall 6.5 
percent growth nationally. 

Like employment, venture capital backed firms outperformed 
their national counterparts in every industry sector when measured by 
sales. Again, the computer software industry provides a strong 
example of the differential. Venture backed computer software companies witnessed sales growth of 31 percent, compared with an overall 5 
percent growth rate for the industry sector as a whole. 

The results reflect strong growth prospects and high venture 
penetration in some of the most technologically advanced sectors, 
particularly medical, which grew rapidly during this period. 

The data also reveal that venture capital financiers are efficient 
movers of capital. In fact, they often help in the creation of these fast 
growing industries. They are instrumental in bringing new ideas to the 
market. 

SALES GROWTH AT VENTURE CAPITAL BACKED COMPANIES
VS. TOTAL SALES GROWTH
BY INDUSTRY SECTOR 
2000 - 2003


VC Sales Total Sales 
Industry Growth Growth 
Biotechnology 28% 22% 
Business/Financial 11% 11% 
Communications 2% -7% 
Computer Hardware and Services 12% -2% 
Computer Software 31% 5% 
Healthcare Products 9% 6% 
Healthcare Services 26% 25% 
Industrial/Energy 6% 0% 
Retailing and Media 20% 9% 
Semiconductors -16% -21% 
Total 12% 6% 

VENTURE CAPITAL 
SUPPORTS GROWTH OF 
.BREEDER. INDUSTRIES 

Breeder industries are those 
industries that have strong employment 
gains, but with mild sales growth. 
Normally, these firms are primarily 
concerned with research and development and are then commonly acquired 
by other firms once the concept is ready 
to market. 

VENTURED FIRMS VS.
NATIONAL AVERAGE
EMPLOYMENT AND SALES
GROWTH DIFFERENTIALS


2000 - 2003 
Employment Sales 
Growth Growth 
Industry Differential Differential 

Healthcare Products 18% 3% 
Semiconductors 16% 5% 
Biotechnology 17% 6% 
Industrial Energy 10% 6% 


VENTURE CAPITAL BACKED 
COMPANY WAGES GROW FASTER 
THAN NATIONAL AVERAGE 

Venture capital supporte
d
firms contribute more tha
n
their share of new ideas
,
operate in high value indu
s
tries, and generate highe
r
wages
.


Average Wage Growth
Ventured Firms vs. Total Private Sector
2000 - 2003



The Global Insight study shows that venture capital firms tend to 
cluster in fast growing and higher paying industries. The graphs below 
show the wage growth for those industries that have a high intensity of 
venture capital investment and those industries with a low intensity of 
venture capital investment. Those firms with a higher intensity of 
venture capital tend to be firms that also have a higher wage growth. 

The data show that wages paid by venture capital backed firms 
grew by 12 percent between 2000 and 2003, compared to a national 
wage growth rate of 11 percent. As the graph below illustrates, the 5 
venture-intensive industries with the most rapid wage gains are communications, biotechnology, semiconductors, computer software, and 
healthcare products. 

Several venture capital intensive industries posted substantial 
wage increases in the last three years. Wages in biotechnology and 
communications each jumped by 18 percent between 2000 and 2003. 
Other fast growing industries measured by 2000 to 2003 wage growth 
rates were semiconductors, computer software, and healthcare. 

WAGE GROWTH IN VENTURE INTENSIVE INDUSTRIES
VS. NONVENTURE INTENSIVE INDUSTRIES


Wage Growth in Venture Wage Growth in Nonventure 
Intensive Industries Intensive Industries 
2000 - 2003 2000 - 2003 



VENTURE CAPITAL SUPPORTS 
EMPLOYMENT ACROSS THE COUNTRY 

Venture backed companies create jobs across the nation. 
California, Texas, Massachusetts, Pennsylvania, and Georgia led the 
nation by employment in venture backed firms headquartered in their 
state in 2003. These firms create a tremendous number of jobs at the 
state level. For instance, venture backed companies headquartered in 
California were responsible for employing almost 2.5 million people 
nationwide in 2003. Venture capital supported firms headquartered in 
Texas generated nearly 900,000 jobs across the nation, and more than 
700,000 jobs were created by venture capital firms headquartered in 
Massachusetts. Pennsylvania and Georgia completed the top five 
states for national job creation by venture capital backed companies 
headquartered in the state. 

EMPLOYMENT AT VENTURE CAPITAL BACKED 
FIRMS HEADQUARTERED IN THE STATE
2000 - 2003


2000 Employment at 2003 Employment at Percent 
Rank State VC Backed Firms VC Backed Firms Change 
1 California 2,341,000 2,470,900 6% 
2 Texas 861,400 899,200 4% 
3 Massachusetts 668,600 712,300 7% 
4 Pennsylvania 534,100 604,000 13% 
5 Georgia 459,900 551,400 20% 
6 Tennessee 497,200 543,000 9% 
7 New York 451,400 470,500 4% 
8 Washington 319,400 399,900 25% 
9 Virginia 310,200 333,200 7% 
10 New Jersey 305,900 310,900 2% 
11 Florida 305,100 309,700 2% 
12 Minnesota 275,700 288,000 4% 
13 Illinois 231,800 235,900 2% 
14 Ohio 199,700 195,200 -2% 
15 Connecticut 183,700 189,700 3% 


VENTURE CAPITAL SUPPORTS SALES 
ACROSS THE COUNTRY 

Venture backed companies generate sales nationwide. 
California, Texas, Massachusetts, Washington, and Pennsylvania 
topped the list of states by sales of venture capital backed firms 
headquartered in the state. Venture capital backed companies 
headquartered in California were responsible for $438 billion in sales in 
2003. In Texas, venture backed sales reached nearly $190 billion in 
2003 and exceeded $100 billion in Massachusetts. Other leading 
states measured by venture capital backed firms sales were 
Washington, at slightly more than $100 billion, and Pennsylvania, at $94 
billion in 2003. 

SALES BY VENTURE CAPITAL BACKED FIRMS
HEADQUARTERED IN THE STATE
2000 - 2003


2000 Sales by 2003 Sales by Percent 
Rank State VC Backed Firms VC Backed Firms Change 
1 California $398 B $438 B 10% 
2 Texas $176 B $188 B 7% 
3 Massachusetts $96 B $107 B 12% 
4 Washington $83 B $102 B 22% 
5 Pennsylvania $74 B $94 B 28% 
6 Georgia $74 B $91 B 24% 
7 New York $75 B $80 B 7% 
8 Virginia $48 B $64 B 32% 
9 Florida $56 B $61 B 8% 
10 Tennessee $51 B $60 B 17% 
11 Minnesota $49 B $57 B 15% 
12 New Jersey $45 B $50 B 11% 
13 Connecticut $40 B $49 B 24% 
14 Illinois $31 B $34 B 10% 
15 North Carolina $24 B $27 B 13% 


VENTURE CAPITAL SHIFTS MIX 
OF U.S. R&D TO SMALLER FIRMS 

U.S. research and development (R&D) is the envy of the world. 
Academic and government sponsored research centers often 
contribute to the new ideas that make ventured companies work. 
Indeed, R&D is the staple of the venture capital industry and small firms 
are playing a larger role in this activity. 
Global Insight found that ventured firms, adjusted for size, 
spend over twice as much on R&D as nonventured firms. In particular, 
small firms in the venture dominated information technology and 
medical-related sectors are major contributors to these trends. The 
share of U.S. R&D performed by firms with fewer than 500 employees 
rose from 5.9 percent in 1984 to an estimated 20.7 percent in 2003. 
The dollar value of small company R&D rose from $4.4 billion in 1984 to 
an estimated $40.1 billion in 2003, a ninefold increase. 

The increased penetration of small company research is most 
striking in the biotechnology sector. The small company share of 
biotech research has expanded massively from some 3 percent in 1984 
to nearly 40 percent in 2003, while the share of the large companies 
shrank from 31 percent in 1984 to 18 percent in 2003. 

Even when small ventured firms grow to be among the biggest 
in their industry, they remain leaders in R&D. Many of the ventured 
companies founded during venture capital.s infancy 20 to 30 years ago 
have quickly grown from small private companies to among the largest 
in the country. Of the top firms in U.S. R&D spending, many were either 
ventured themselves, such as Microsoft, Cisco, and Intel, or were major 
acquirers of ventured firms, like Johnson & Johnson and Pfizer. 

Small Company Contribution to R&D 

(% of Total U.S. Industry-Performed R&D 1984–2003 est) 

TOP 20 R&D-SPENDING COMPANIES 
2001 

Rank Company R&D Spending 

1 Ford Motor Company $7.4 B 

2 General Motors $6.2 B 

3 Pfizer, Inc. $4.8 B 

4 IBM $4.6 B 

5 Microsoft $4.4 B 

6 Motorola $4.3 B 

7 Cisco Systems $3.9 B 

8 Intel $3.8 B 

9 Johnson & Johnson $3.6 B 

10 Lucent Technologies $3.5 B 

11 Hewlett-Packard $2.6 B 

12 Merck & Company $2.5 B 

13 Bristol-Myers Squibb $2.3 B 

14 Eli Lilly and Company $2.2 B 

15 Pharmacia $2.2 B 

16 Sun Microsystems $2.0 B 

17 General Electric $2.0 B 

18 Boeing $1.9 B 

19 Wyeth $1.9 B 


20 Procter & Gamble $1.8 B 

Source: U.S. National Science Foundation 

-
5,000 
10,000 
15,000 
20,000 
25,000 
30,000 
35,000 
40,000 
45,000 
50,000 
0% 
5% 
10% 
15% 
20% 
25% 
Small Co. (Millions of $) Small Co. (%of Total) 
Source: NSF, R&D in Industry: 1991–2000, Tables A3 & A4 
NSF, Preliminary Release, 2001 and 2002, Tables A3 & A4 
NSF, Infobrief "U.S. R&D Projected to Have Grown Marginally in 2003" 


VENTURE CAPITAL SPURRED THE 
HIGH-TECH PRODUCTIVITY BOOM 
OF THE 1990S 

Rapid advances in 
computing power, software, 
and communications 
capabilities have formed a 
set of powerful complemen
tary innovations. 

E-Commerce Sales Triple Since 1999 

4th Quarter Sales
1999 - 2003
(in billions)



Source: U.S. Census Bureau 

The venture capital industry has made an enormous contribution 
to the high-technology industry. In turn, high-technology has furthered 
national productivity. The three percent annual growth rate in productivity since 1996 stems from investments in a range of technology industries such as computers, software, and communications equipment. It 
has helped user industries like retailing, airlines, and manufacturing to 
be more productive. 

Case Study: The Transformation of Retailing 

Retailing has been transformed in many ways over recent years. 
Ventured retail companies, including The Home Depot, Office Depot, 
and Staples, have offered a creative business model that is copied. 
Further, innovations in retail such as point of sale, bar code scanners, 
and automated payment by credit and debit cards permit the capture of 
sales information on a real-time basis. Today, retailers have real-time 
information on what is selling and what is not. They can improve 
inventory controls, allowing them to cut costs and lower prices. 

Data also show that the impact of so-called E-tailing has been 
widespread. U.S. Department of Commerce statistics indicate that 
E-tailing has been growing rapidly in percentage terms, although it still is 
only a modest percentage of total retailing. 

The airline manufacturing and travel industries have been transformed in the last 10 years. For example, major advances have 
improved essential equipment. Today, airplanes are equipped with 
modern collision avoidance devices. Also, web-based travel booking 
has produced dramatic changes. The web is a natural for air travel, and 
various E-travel services are proving economically viable. 

Manufacturing Productivity Gains 

Manufacturing productivity has shown dramatic gains of 4.2 
percent per year since 1993, well above overall productivity gains. 
Productivity enhancing investments in manufacturing include advances 
in Computer-Aided Design and Manufacturing (CAD/CAM), bar coding, 
just-in-time inventory, and automated machine tools and process 
control. 


VENTURE CAPITAL FUELS THE 
BIRTH OF NEW PUBLICLY TRADED 
COMPANIES 

There are five stages in the investment financing of a firm: 
seed; start-up; early; expansion; and later. Most venture outlays focus 
on the seed, start-up, and expansion stages. A tiny fraction of venture 
capital money, about 2 percent, goes to the earliest stage of financing, 
called seed money, which constitutes funds for initial research to prove 
a concept. A significant portion of venture capital is invested to 
support product development and initial marketing, often referred to as 
start-up funds. 

Global Insight reports that seed and start-up activities constituted $21.4 billion out of the total $340 billion invested in all the 
business stages. This accounts for approximately 6.3 percent of all 

U.S. venture capital disbursements. 
Venture Capital Backed Merger and Acquisition Activity 

Mergers and acquisitions (M&A) are an important liquidity 
strategy for venture capitalists and the start-up firms they fund. There 
has been a recent boom/bust in M&A activity. Total venture backed 
merger and acquisition activity with disclosed values dropped from a 
high of 202 in 2000 to 122 in 2003, plummeting from $68 billion to $8 
billion. 

VENTURE CAPITAL BACKED
MERGERS AND ACQUISITIONS WITH
DISCLOSED VALUES
1997 - 2003


Total Total Price 
Year Deals (in billions) 
1997 115 $7.4 
1998 132 $9.1 
1999 161 $37.5 
2000 202 $68.4 
2001 165 $17.7 
2002 150 $7.8 
2003 122 $7.7 

Source: PricewaterhouseCoopers/Venture 
Economics/National Venture Capital Association 
MoneyTree(tm) Survey 

STAGES IN VENTURE FINANCING 


. 
Seed 
. 
Start-up 
. 
Early 
. 
Expansion 
. 
Later 


VENTURE CAPITAL SUPPORTS U.S. 
GLOBAL COMPETITIVENESS 

AVAILABILITY OF VENTURE CAPITAL 

MEASURED BY EASE OF AVAILABILITY
FOR BUSINESS DEVELOPMENT 
2004 


Rank Country 

1 United States 

2 Hong Kong 

3 Finland 

4 Taiwan 

5 Singapore 

6 Canada 

7 United Kingdom 

8 Ireland 

9 Israel 

10 Malaysia 

Source: World Competitiveness 
Yearbook, 2004 

The United States maintains the oldest and most dominant 
position worldwide in venture capital. The lead of the United States in 
venture capital, combined with the widespread use of technology, has 
enabled an otherwise mature, wealthy economy to improve its income 
and standard of living over most other advanced economies. The 
United States has a unique mix of policy, entrepreneurship, and skilled 
research that is unmatched worldwide. 

The most recent statistics show that the United States has the 
lion.s share of total venture capital worldwide at an estimated 72 
percent. Also, it is notable that venture capital now supports over 40 
percent of the companies entering the publicly traded arena via IPO. 

Venture Capital Investment and the High-Tech Industry 

The graph below shows global trends in venture capital investment in the high-technology sector. Indeed, the data show that Israel is 
the worldwide leader in venture capital investment in high-technology as 
a percent of GDP, followed by the United States, Canada, and Sweden. 
Also of note, Korea, one of the least developed of the OECD countries, 
has an exceptional venture capital effort in high-technology and health-
related sectors. Interestingly, the share of venture capital investment in 
high-technology sectors continues to be small in many European Union 
countries, Japan, and Australia. 

Venture Capital Investment as 
a
Percent of GDP, Select Industries


1999 - 2002

0.7 

0.6 

0.5 

0.4 

0.3 

0.2 

0.1 
0 
% of GDP 


IsraelUnited StatesCanadaSwedenUnited KingdomKoreaNetherlandsFinlandFranceIrelandBelgiumEuropean UnionDenmarkNorwayGermanySwitzerlandNew ZealandAustraliaItalySpainGreecePortugalAustriaJapan 

Communications 

Information Technology 

Health / Biotechnology 

OECD Venture Capital Database http://www.oecd.org/dataoecd/4/11/28881195.pdf 


METHODOLOGY FOR THE GLOBAL 
INSIGHT STUDY 

Global Insight (formerly known as DRI-WEFA) constructed a 
database consisting of 26,494 venture capital financed companies. 
The database allows Global Insight to estimate the sales and employment contribution of venture backed firms. The analysis is broken 
down and analyzed by industry sector, state, and region. 

Companies included in the study are obtained from the 
PricewaterhouseCoopers/Thomson Venture Economics/National 
Venture Capital Association MoneyTree. Survey . the official venture 
industry data source. 

National Venture Capital Association 

NVCA represents over 450 venture capital and private equity 
firms. NVCA.s mission is to foster the understanding of the importance 
of venture capital to the vitality of the U.S. and global economies, to 
stimulate the flow of equity capital to emerging growth companies by 
representing the public policy interests of the venture capital and 
private equity communities at all levels of government, to maintain high 
professional standards, to facilitate networking opportunities, and to 
provide research data and professional development for its members. 

NATIONAL VENTURE CAPITAL ASSOCIATION 
1655 Fort Myer Drive, Suite 850 
Arlington, Virginia 22209-3114 
Phone: 703-524-2549 
Fax: 703-524-3940 
www.nvca.org 

This publication was prepared from the Global Insight study by 
Content First, LLC, a full-service research firm based in Washington, 

D.C. It provides research services to trade associations, businesses, 
law firms, consulting firms, and the public affairs community. Content 
First utilizes a unique process that melds solid research and analysis 
with presentation and communication to bring data to life. For more 
information about Content First, please visit www.contentfirst.com. 

National Venture Capital Association 

1655 Fort Myer Drive, Suite 850 
Arlington, Virginia 22209-3114 
Phone: 703-524-2549 
Fax: 703-524-3940 
www.nvca.org