Venture Capital Industry Profile

Companies in this industry invest capital in new business ventures. Major venture capital firms include Accel Partners, Kleiner Perkins Caufield & Byers, New Enterprise Associates, and Sequoia Capital (all based in the US), as well as Amadeus Capital Partners (UK), Globis Capital Partners (Japan), Jerusalem Venture Partners (Israel), and Nexus Venture Partners (India).

China, India, and Israel are growing markets for venture capital. China has the world's biggest and fastest growing online population, giving rise to a wave of Internet entrepreneurs. Also, as China's wealth increases, Chinese investment in US startups will likely grow. Meanwhile, India is a magnet for technology startups, and Israel's location between the emerging markets of China and India and the financial centers of London and New York creates opportunities for merging ideas with capital.

The US venture capital industry includes about 525 active firms that invest about $27 billion annually, according to the National Venture Capital Association. High growth is forecast for the next two years. Key growth drivers include improved stock market performance and increased deal volume in sectors such as information technology and clean technology.

COMPETITIVE LANDSCAPE

Demand is driven primarily by the pace of technological innovation and the number of companies created to commercialize new technologies. The profitability of individual companies depends on successfully choosing and managing a portfolio of investments. Large firms have advantages in attracting capital, developing expertise in multiple technology markets, and ...