Venture funded firms accounted for nearly 4.3 million employees in the U.S. and generated revenue of $735.9 billion in 2000, a proportionately large infusion of human resources and capital given the size of the VC sector, according to a report released last week.
The figures above represent 3.3% of U.S. payroll, 7.4% of U.S. GDP and 4.2% of U.S. company-generated revenue, according to the WEFA Group, which conducted the study for the National Venture Capital Association (NVCA). The numbers were released at last week’s NVCA Annual Meeting in New York.
Andrew Hodge, senior vice president of the WEFA Group, said venture capital produces results far above its small share, representing just 2.1% of funds raised the last five years.
Some of the biggest venture-backed names in corporate America produced this job creation, Hodge said. Ten firms led by Home Depot, Intel and Compaq originally ventured in the 1970s and 1980s and now produce more than $10 billion in sales.
The Southeast, not California, accounted for the most venture-backed jobs by geographic region, with just over 1 million jobs. Southeast venture-backed strongholds include Home Depot, FedEx, Humana, and Outback Steakhouse.
California had a total of 900,000 VC-backed positions, followed by the Northeast (including New England), Midwest and Southwest.
Consumer industries, including those served by FedEx, Home Depot and Outback Steakhouse, ranked No. 1 in jobs, WEFA reported. The computer sector was second, medical third, and communications (including the Internet) was fourth.
California was easily the top revenue-producing region, with nearly $180 million in venture-funded revenue in 2000. The Southeast was second with $140 million and the Southwest third at around $120 million.
The computer sector topped all fields in revenue creation, with nearly $200 million of the overall $736 million.
Hodge said that the study’s total would increase at least 30% if it were to include venture-backed companies that were acquired and absorbed by others. He cited Johnson & Johnson as one prominent example. Over the years, J&J has acquired more than a dozen smaller ventures that had venture backing.
WEFA, which administered the study in Q1 2001, said it used a database of originally ventured companies mapped against the D&B database to determine its 2000 figures.
The WEFA study concluded that the benefits of venture capital go beyond job and wealth creation. It helps spread technology, which produces patents and improves productivity for companies.
And there are also quality of life issues that benefit from venture funding, Hodge said. Products like pacemakers, derived from venture funding, help save lives, and there may not be a quantifiable price on that.