U.S. companies that received venture capital from 1970-2005 accounted for 10 million jobs and $2.1 trillion in revenues in 2005, according to a study conducted by Global Insight and issued today by the National Venture Capital Association (NVCA). This represents 9 percent of the total private sector work force and 16.6 percent of total U.S. GDP. Venture-backed companies also outperformed their non-ventured counterparts between 2003 and 2005 with a 4.1 percent compound annual growth rate in jobs and an 11.3 percent compound annual growth rate in sales versus total private sector growth rates of 1.3 percent and 8.5 percent respectively. The study further revealed that venture-backed companies comprise significant percentages of the jobs and revenues in the technology and retail sectors.
"Since we first measured venture capital's impact on the U.S. economy in 2000, we have seen that venture-backed companies consistently outperform their non-ventured counterparts for job creation and revenue generation across all industries," said Mark Lauritano, managing director of Global Insight's Lending & Payments Practice. "We took three different measurements at three different points in the business cycle with unwavering results. The economic contribution that venture-backed companies make is sustainable and growing."
Some of the nation's best known venture-backed companies include FedEx, Intel, Cisco, Starbucks, Genentech, Google, eBay, Apple and Home Depot.
"Venture capital is an integral and critical component of US economic growth and becoming more so every year," said Mark Heesen, president of the National Venture Capital Association. "Consider the fact that venture investment itself represents just 0.2% of U.S. GDP but venture-backed companies account for nearly 17% of GDP. It is critical that key components of the venture capital ecosystem - support for our capital markets, funding for basic research and development, increases in H-1B visas, and more math and science graduates- remain conducive for fostering this kind of vibrancy," Heesen added.
The study, entitled Venture Impact: The Economic Importance of Venture Capital Backed Companies to the U.S. Economy, was commissioned by the NVCA and conducted by Global Insight, a leading economic analysis and forecasting firm. Global Insight analyzed a database of nearly 23,500 U.S.-based companies that received venture capital financing between 1970 and 2005. From this database, Global Insight measured the employment and revenue contributions of these companies to the national economy. The data was further broken down by industry and by state.