Published On: Thu, Aug 18th, 2016

Which Industries Attract The Most Venture Capital

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Down through the years, U.S. venture capital financing has resulted in some major successes, including the likes of Intel, Google and Twitter. VC investment is heavily concentrated across a small number of industrial sectors, according to a report from Martin Prosperity. In fact, America’s top five industries receiving VC capital account for 76.3 percent of all VC investment nationwide, some $25 billion.

Echoing all of those success stories, software receives the largest slice of the VC pie by a considerable distance, accounting for 36.2 percent (nearly $12 billion) of all investment over the past year. Biotechnology was in second place with 17.3 percent ($5.7 billion) while media and entertainment rounded off the top three with 9.5 percent ($3.2 billion). However, if you’re a software developer with a bright new idea, don’t get too optimistic. Due to the high level of risk involved in emerging ventures, VCs are extremely picky, financing only one or two ventures out of 100 business plans they see.

 

Statistics and facts on venture capital

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only a part of the VC companies develop into successful and high-return bringing businesses.

The United States, followed by Europe and China, was the global leader in terms of value of venture capital investments worldwide in the last years and recorded the highest number of VC rounds invested worldwide in 2014. The leading venture capital investors globally in terms of number of deals in which they assisted, were 500 Startups, Sequoia Capital and Y Combinator.

In the United States, the years 1999-2001 were the most prosperous for venture capital investments in terms of capital fund raising, value of investments and number of deals. In 2014, the value of U.S. venture capital investments amounted to nearly 30 billion U.S. dollars. The software sector dominated the U.S. venture capital investments in 2015, with 41 percent of the market share. It can be explained by the presence of Silicon Valley, where a large amount of hi-tech companies are concentrated. The VC investments in the Silicon Valley accounted for the largest part of the U.S. venture capital investments.

The United States was listed first on the list of most confident VC countries by venture capital and private equity investors in 2014. The sectors perceived most confident globally were cloud computing/SAAS and mobile services.

 

This chart shows the top 10 U.S. industry sectors by share of venture capital investment.

Infographic: Which Industries Attract The Most Venture Capital | Statista

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