Mature Companies Attract Bulk of Venture Capital
"U.S. and European officials warn the trend robs new entrepreneurial ideas of needed investment.
U.S. and European trade officials fear that mature companies are soaking up venture capital, leaving little for start-ups that provide a critical resource for growing economies.
Based on meetings with members of the venture capital industry, a working group of officials from the Department of Commerce and the European Commission concluded that early-stage companies and entrepreneurs are not receiving the investment capital needed to launch. The group published a report last week calling for government investment in established venture funds to correct what they perceive as a "fundamental market failure in early stage financing."
The Department of Commerce commissioned a study by analysts at VentureOne, which found that between 1992 and 2004, early stage companies received only $1 million on average versus $3 million to $5 million for later stage ventures. The data is based on 11,600 companies that received venture investments during this time period. Of those, almost half are still in business and have received additional rounds of funding worth $8 million on average."
U.S. and European trade officials fear that mature companies are soaking up venture capital, leaving little for start-ups that provide a critical resource for growing economies.
Based on meetings with members of the venture capital industry, a working group of officials from the Department of Commerce and the European Commission concluded that early-stage companies and entrepreneurs are not receiving the investment capital needed to launch. The group published a report last week calling for government investment in established venture funds to correct what they perceive as a "fundamental market failure in early stage financing."
The Department of Commerce commissioned a study by analysts at VentureOne, which found that between 1992 and 2004, early stage companies received only $1 million on average versus $3 million to $5 million for later stage ventures. The data is based on 11,600 companies that received venture investments during this time period. Of those, almost half are still in business and have received additional rounds of funding worth $8 million on average."
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