In the April edition of FrontLine, we analyzed the success factors of Silicon Valley. Indeed, this American industrial cluster has magnetic properties: it attracts innovative entrepreneurs; skilled researchers and employees; local and foreign corporations and, of course, venture capital (VC). It is so successful that many other regions have tried to emulate it, often with mixed success.

One of the difficult questions that non-American industrial policies have to tackle is the place of VC as a cause or a consequence of the Californian innovation stream. Answering it would crucially shape public action for many decades to come. Solving this question requires breaking it down into smaller ones, which can in turn be solved with specific approaches.

One argument easily settled is that VC is one among multiple enabling factors of innovation. Moreover, as it is, first and foremost, a local activity, VC is directly related to the specific economic, social and cultural characteristics of the country that investors are active in. Beyond theoretical debates, and thanks to the high quality data provided by Pevara, this issue of FrontLine will look at VC in practice in different countries to identify potential common factors between different national models. The aim of our approach will be to see how these different models help us to compose a more nuanced picture of VC as a financial instrument.

Figure 1 – Risk-return (TVPI) profile of VC funds, aggregated by countries

Figure 1 – Risk-return (TVPI) profile of VC funds, aggregated by countries

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