Global venture capital industry triples in size

Financial Services | Funding | Reports

Octopus Ventures, one of the largest early stage investors in Europe, has today published a new study that maps the evolution of the global venture capital industry.

The research coincides with the publication of Question the Questions, a new report from Octopus Ventures that provides a stress-tested guide to international expansion and tracks the growth of start-up clusters across the US. It combines data analysis with practical advice for start-ups looking to expand their offering to the US.

Question the Question’s findings demonstrate that the global venture capital industry has tripled in size from $53bn in 2008 to $160bn in 2018.

Analysis from Octopus Ventures found that the global venture capital market is more sophisticated, engaged and invested in the future of enterprise than ever before, with record sums of capital being invested in 2017.

The report tracked total deal count, which has more than doubled in the same time period – up to 14,727 from 6,990.

Key findings

US dominates but VC landscape is now truly global

  • In 2008, the US accounted for 79% of the global VC industry – today its share has dropped to 53%
  • The VC landscape is not only changing globally but also within the US – new clusters have emerged since 2008, with growth in investments particularly significant in New York City (855%), Chicago (357%) and Boston (153%)

UK retains its position as European leader in investment

  • The UK’s share of the European VC industry has increased by 11% in the last 10 years to 42%
  • Total VC amount invested in the UK stood at $2.2bn in 2008 compared to $7.9bn today – a 255% increase
  • The UK is making larger, later-stage deals, with a greater focus on scale-up businesses and unicorns
  • Investments in VC in France have only doubled over the last decade, taking total amount invested to $2bn – the UK leads the way by a long shot

Asia is a global player

  • Total amount of capital invested has increased 7-fold in the last 10 years – taking Asia’s share of global VC capital from 4% in 2008, to 27% in 2017

Alliott Cole, CEO of Octopus Ventures, commented: “Over the last decade, technology – software, hardware and the platforms they enable – has created global transformation on an unprecedented scale. It has forced change and challenged ways of working, disrupting incumbents, empowering the innovators and entrepreneurs who dared to think bigger.

“There was a time when if you were in tech, it was inevitable that you would head to the Bay Area. Today – while Silicon Valley retains its leadership position – it no longer has a monopoly on scale, expertise or know-how. Entrepreneurs can now access the talent, advice and resources they need remotely.

“A first-hand witness to the acceleration and expanding distribution of venture capital over the last 10 years, Octopus Ventures has published a battle-tested comprehensive, toolkit to equip scaleups with the knowledge and expertise needed to decide whether they should expand to the US.”

Priscila Bala, Head of Octopus Ventures’ New York office, said: “The ‘Question the Questions’ report came out of the realisation that many European companies can benefit from re-examining their ways of thinking. The very questions they were asking themselves – “should we expand to the US?”; “does success require a US presence?”; “is the European landscape simply an earlier iteration of the US” – were due for an upgrade. A common language and pro-business regulation can make the move to the US attractive, but we shouldn’t underestimate the challenges they can face.

“Many European start-ups see US expansion as a logical next step to build on the work they have done in their home market; but in many cases, a US operation can be a difficult return to square one. Founders do well by rejecting all assumptions when entering the US market, which means questioning and testing their expectations of a country that seems culturally familiar but is a world apart. As this report makes clear, there isn’t a ‘one size fits all’ recipe for success and there is no single right answer as every business and entrepreneur is unique.

“At Octopus Ventures, we provide expert advice to our portfolio companies that are looking to head West. With a team on the ground in New York, our advice is whether they go early or go late, to put everything behind the expansion and have an in depth understanding of the breadth of the US market and opportunities available to succeed.”

Question the Questions report used internal data from the 32 portfolio companies that have expanded internationally with the help of Octopus Ventures, 76 other VC-backed European companies that also made that journey, as well as Pitchbook data.

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