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Venture capital adds economic spice

Author: Thomas Meyer
Date: September 2010
  • Venture capital injects economic dynamism: An increase in VC
    investments of 0.1% of GDP is statistically associated with an increase
    in real GDP growth of 0.30 pp. Early-stage investments have an even
    bigger impact of 0.96 pp.
  • The direction of causality is not always easy to establish. Yet, tests for
    Granger-causality in the biggest market, the US, suggest that causality
    runs from VC-investments to growth. There is also substantial microevidence
    that supports this view.
  • Exuberances drive much of the correlation. Taking account of the dotcom boom and bust as well as of the financial crisis leads to lower
    coefficients.

Geography: Europe

Type of study: Consulting research

Relevant for: Venture Capital

Source: Deutsche Bank Research