Venture capital and its importance in developing Europe’s growing businesses is the subject of the European Venture Capital and Private Equity Association’s (EVCA) latest survey, unveiled at the annual symposium in Athens. This follows on the heels of the success of EVCA’s report published in early 2001 called “The Economic and Social Impact of Management Buyouts & Buy-ins in Europe”, which was undertaken by the Centre for Management Buy-Out research at Nottingham University.
This survey, no doubt, with its findings that the change in the total number of employees after buyout was up (by 61.4 percent) and so were exports as a percentage of sales (from 14.4 per cent to 16 per cent for other EU countries and 10.3 per cent to 12.3 per cent worldwide), had a positive impact on EVCA’s aim of raising the profile of private equity in the corridors of power in the EC.
This time the attention is turned to venture capital, and the report is titled “The Survey of the Economic and Social Impact of Venture Capital in Europe.” Nottingham University Business School conducted the research and found that 95 per cent of venture-backed companies felt they would not exist or would have developed more slowly if they had not received venture capital investment. Sixty per cent of respondents said that without venture capital funding and support they would not be in business today. Consequent to the initial venture capital investment, an average of 46 new jobs were created by each of the companies surveyed.
Venture capital funding, which ranged over a period of two to seven years, was used to implement a range of growth strategies, including research and development, marketing and training. Over half the companies considered their post-investment performance significantly outstripped that of their competitors. The post-investment period is characterised by substantial increases in turnover – by 120 per cent in the first four years for seed and start up companies and by 33 per cent in the first four years for expansion companies.
The survey was conducted among 364 European early stage and developing companies in receipt of venture capital between 1995 and 2001. The survey was carried out during the first quarter of 2002.