Venture ecosystem: market overview of different regions
Venture capital financing enables new companies to enter the market and develop. Most often this type of investment is needed by technology start-ups, for which there is a high risk of failure. The principle of financing is the same for everyone – capital is invested in various projects, expecting that some of them will bring profit in the future. But the venture capital ecosystem in each country has its own characteristics that are useful to know.
Investors are both individuals and funds. Investment volumes vary depending on the startup, stage and market specifics.
The USA has the most developed venture capital investments. There are about 1562 funds that provide financing. These companies have their own classification. Large venture capital funds invest in projects that are already at the IPO stage. The average volume of investments in the USA at this stage is 100-500 million dollars. If several funds take part, the transaction can be made for large amounts.
It is possible to finance projects at earlier stages. Small funds offer an average check in the range of 10-30 million dollars.
The U.S. venture capital ecosystem has the largest amount of capital, there is competition among companies, where the funds compete for the most promising startups.
The European market has more modest checks. Here only single funds can offer financing in the amount of $100-500 million. Most companies invest $10-20 million in projects at the stage A round. A number of venture capital funds operate in several countries, investing in startups of various directions. A feature of the European venture ecosystem is the private clubs for investors that operate on the basis of funds. Most of them are located in Switzerland, Italy and Germany.
Financing of startups here is carried out according to the established rules – the market is quite conservative, which, combined with small amounts of investment does not allow it to fully expand.
Asia has recently begun to develop its venture capital sector. There are 162 registered funds in the region, which is not enough for such a fast-growing market. This is why companies from other countries are actively developing the Asian direction.
The formation of the Asian venture capital ecosystem is facilitated by the government. A number of funds have been established by the governments of China and Singapore, and large local corporations, such as Alibaba and Tencent, are also involved. Transactions in the market can reach huge amounts, a vivid example is the Grab company, which managed to obtain financing in the amount of $2.5 billion. Venture investment in Asia is rapidly developing, in terms of capital it has already almost caught up with the American.
The venture capital ecosystem of Ukraine is still in its infancy and cannot compete with other countries. The main problem of the market is the lack of mechanisms through which start-up companies could attract funds.