An analysis has been carried out by the Center for American Entrepreneurship and NYK’s Shack Institute of Real Estate that has revealed some interesting facts about the US-centric practices of Venture Capital. The analysis examines the flow of venture capital over 100,000 deals from 2005 to 2017. It shows how the US-venture capital became the global phenomenon.
Although, the country still seems to be producing the largest amount of venture capital investment but by 2012, it was observed that the number has fallen to 70%. Moreover, the US share of total venture investment fell to just 50%.
It has been observed that the mom-US countries have gained growth in the global startup and the venture economy over the past decade. The investment increased from $50 billion to over $170 billion in size. According to the analysis more countries such as UK, India, and China account for a third of global venture deal count and dollars.
The researchers have also found that the erosion of the US share of venture capital is not going in the right direction.
The rise in the rest of the world:
With the startup ecosystem growing outside the US at a faster pace, the data revealed a rise in the rest of the world as compared to the US tech hubs. The Bay Area remains the world’s prominent beneficiary of the US investment. The New York, Los Angeles, and Boston, are all in the top ten cities that contribute to the global venture growth. The data has also shown that only six of the top 20 cities are located in the US and 14 are in the Asia and Europe. However, the experts have found that the bulk of the VC activity remains highly concentrated among a small number of current startup cities.
The surge of mega deals:
China’s startup ecosystem is unsurprisingly becoming the largest contributor of the globalization of venture capital. This is reducing the US share from the market. According to reports China has captured nearly a fourth of total VC investment in the past three years. As compared to any other city, Beijing has contributed more to the VC investment. It is because of the idiosyncratic rise of the late-stage mega deals. These deals are $500 million and more in size and make up a significant portion of all the venture dollars that have been deployed.
It’s not all bad:
No matter the US share of the venture-backed startups and venture economy is falling but it’s not by all means bad, in fact the access to capital, the spread of the entrepreneurial spirit, as well as a stronger economic development, is almost unquestionably a really good thing. The US is losing its competitive edge in the startup and venture market which could bring significant implications for the leader of the global economy.
The US have been a huge beneficiary of the foreign-born entrepreneurs and the intense competition for talent market marks another major challenge for the country. The experts reveal that the biggest reason for having a problem attracting entrepreneurs is because of the unfriendly US visa policies. It involves all the recent tensions over the immigration laws that are making the US a less attractive destination.