Enjoy complimentary customisation on priority with our Enterprise License!
The Venture Capital (VC) Investment Market size is forecast to increase by USD 1,875.7 billion, at a CAGR of 33.48% between 2023 and 2028. The market is experiencing significant growth, driven by several key trends. Firstly, there is a rising investment in biotech and remote working software companies due to the increasing focus on technological advancements and the shift towards remote work. Secondly, the number of high-net-worth individuals (HNWIs) globally is on the rise, providing a larger pool of potential investors for VC firms. Smart contracts and tokenization further revolutionize investment mechanisms, offering efficiency and security. However, foreign exchange volatility poses a challenge to the market, as fluctuations in currency values can impact investment decisions and returns. Overall, the VC investment market is expected to continue its growth trajectory, fueled by these trends and the ongoing innovation and entrepreneurship landscape.
To learn more about this report, View the Report Sample
Venture capital is a segment of the private equity industry that provides financial resources to entrepreneurial firms and small businesses in the technology sector. This type of investment involves providing capital for a stake in the business in exchange for equity. The venture capital market focuses on high-growth potential businesses, often in areas such as artificial intelligence (AI), cloud technology, and biotech. The venture capital industry plays a crucial role in innovation ecosystems by providing financing to startups and small businesses that may not have access to traditional financing sources. These firms often specialize in niche areas, such as AI, blockchain, and clean energy, and help build talent pools and industry applications. The venture capital market is known for its deal-making culture and the constant pursuit of new deals. The risk-averse nature of banks and other financial institutions makes venture capital an attractive alternative for entrepreneurs seeking funding for their business ideas. The venture capital portfolio includes various sectors, such as software, pharma, healthcare, and financial services. The ultimate goal is to help these businesses grow and eventually go public through an IPO.
Venture capital (VC) is a type of finance source for new businesses or startups with limited funds. Venture capital investment is a pooled investment fund that manages the capital of investors who are looking for private equity investments in startups and small and medium-sized entrepreneurs (SMEs) with high prospects. These investments are often described as high-growth/high-risk investments.
The increasing VC investment in biotech and remote working software companies is driving market evolution. The COVID-19 outbreak resulted in the decline of numerous industries which resulted in reduced demand for venture capital investment services. However, the emphasis on the medical industry, especially the biotechnology sector to develop effective drugs for vaccination resulted in increasing investment in these industries.
For instance, around 448 venture financing rounds were registered for biopharma companies in 2020. Moreover, another characteristic noticed was that venture capitalists recognized the shift towards remote work, especially in IT companies, and invested in such facilities and services. Hence the trend of capitalists investing in growing industries like biotech and remote working software is expected to further boost the market during the forecast period.
The rising number of high-net-worth individuals (HNWIs) globally is one of the market trends shaping the development. HNWIs, having a net worth equal to or greater than USD 1 million, offer special services including investment in reputable private equity and hedge funds. They also offer opportunities to be a part of pre-IPO placements and pre-ICO sales of any venture. Due to possessing large investment and wealth portfolios, these individuals require the experienced services of wealth managers or wealth advisors for efficient finance allocation. These wealth managers help them to manage their portfolios and also carry out functions like asset protection and tax management.
Moreover, wealth management companies offer other financial services, such as financial planning and investment monitoring, to HNWIs. These companies help create efficient financial plans for HNWI clients by working closely with them and understanding their financial goals. They also offer comprehensive portfolio advisory investment services to HNWI clients. Hence such factors will drive market growth during the forecast period.
Foreign exchange volatility is challenging market expansion. Corporations engaging in transactions across countries face transaction risks due to conducting transactions in a foreign currency. For example, a corporation established in Canada that does business in China is subject to foreign exchange risks because it accepts financial transactions in the Chinese Yuan and presents its financial statements in Canadian Dollars.
Moreover, this risk occurs due to the potential for the currency rate to fluctuate prior to the completion of the transaction. Essentially the source of such transaction risks is the duration between a transaction and a settlement. Moreover, if the currency or underlying index has gone down relative to the dollar, it will lead to a loss. Such transaction risks may hinder the development of the market in focus during the forecast period.
The software segment is estimated to witness a significant boost during the forecast period. This industry comprises the development, distribution, and maintenance of software products and services. It can be divided into the following types - application software; system infrastructure software; software as a service (SaaS); operating systems; database software; and analytics software. Moreover, venture capital firms have particularly increased investment in software that is transforming industries including Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), CloudTech, and DevOps. In fact, total investments by venture capitalists in this software exceeded several billion dollars, with few of them being valued at more than a billion dollars and being classified as Unicorns.
Get a glance at the market contribution of various segments View the PDF Sample
The software segment was the largest segment and was valued at USD 153.90 billion in 2018. Moreover, there was a greater number of software startups in 2020 with estimates of about 75,000 startup firms in the US. India also witnessed the emergence of 1,300 startup firms that will contribute towards the growth of this segment of the global market during the forecast period.
Europe is estimated to contribute 43% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The venture capital investment market plays a pivotal role in financing the growth of small businesses and supporting entrepreneurs in various industries. However, risk-averse banks often shy away from providing financing to innovative startups, making angel investors and seed capital essential for deal-making at the angel/seed stage. Information technology has significantly transformed the venture capital landscape, enabling faster execution of new deals. Businesses in the business-to-consumer and business-to-business sectors, particularly those in the information technology sector, are prime targets for venture capital investment. Seed capital provides the initial funding for entrepreneurs to cover operating expenses while they develop their products or services. As businesses grow, they may seek additional financing through subsequent rounds of venture capital funding or eventually, an Initial Public Offering (IPO).
For more insights on the market share of various regions Download PDF Sample now!
The market research report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Market Customer Landscape
The market report also includes detailed analyses of the competitive landscape of the market and information about 20 market Companies, including:
Qualitative and quantitative analysis of Companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize Companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize Companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
The market experiences a growth, driven by innovations in intelligent vehicles, agriculture, and media & entertainment, coupled with advancements in cloud technology and blockchain. Corporate venture capital investment plays a pivotal role in fueling mergers & acquisitions and IPOs. Retail investors, attracted by the potential return on investment, delve into crypto assets like bitcoins, enabled by blockchain technology. Porter's five forces analysis guides market players amidst dynamic competition. With the proliferation of blockchain applications, the market witnesses an influx of capital, reshaping traditional investment landscapes. As the sector evolves, strategic partnerships and astute investments become imperative for capitalizing on emerging opportunities.
Moreover, the market continues to offer entrepreneurial ecosystems rich investment opportunities for businesses at various stages, from seedstage to growth. Entrepreneurs with innovative business ideas in sectors like ecommerce, digital transformation, medical services, and green finance can secure funding through various types, including seed funding, venture capital, private equity, and crowdfunding. Investors conduct thorough due diligence, assessing the entrepreneur's team, market potential, competition, and financial projections. Mentorship, networking, and access to resources are crucial benefits of joining the venture capital ecosystem.
In conclusion, investment opportunities also include initial public offerings (IPOs), mergers and acquisitions (M&A), and private investment in public equity (PIPE). The speed of execution and potential ROI (return on investment) make venture capital an attractive option for entrepreneurs looking to scale their MVPs (minimum viable products) and disrupt industries. Green finance, digital transformation in medical services, and ecommerce are among the current trends driving growth in the venture capital market. Additionally, the increasing focus on sustainable businesses and the digitalization of industries presents new opportunities for entrepreneurs and investors alike.
|
Market Scope |
|
|
Report Coverage |
Details |
|
Page number |
153 |
|
Base year |
2023 |
|
Historic period |
2018 - 2022 |
|
Forecast period |
2024-2028 |
|
Growth momentum & CAGR |
Accelerate at a CAGR of 33.48% |
|
Market growth 2024-2028 |
USD 1,875.7 billion |
|
Market structure |
Fragmented |
|
YoY growth 2023-2024(%) |
26.49 |
|
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
|
Performing market contribution |
Europe at 43% |
|
Key countries |
US, China, India, UK, and Germany |
|
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
|
Key companies profiled |
Accel, Agoranov, AH Capital Management LLC, Balderton Capital UK LLP, Battery Ventures, Bessemer Venture Partners, Caixa Capital Risc SGEIC S.A., Cherry Ventures Management GmbH, First Round Capital, Founders Fund, GGV Capital, Greylock Partners, Hoxton Ventures LLP, Index Ventures UK LLP, Lakestar Advisors GmbH, Seedcamp Investment Management LLP, Sequoia Capital Operations LLC, Target Global, and Union Square Ventures |
|
Market dynamics |
Parent market analysis, market research and growth, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the market forecast period. |
|
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Sector
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
Get the report (PDF) sent to your email within minutes.
Get lifetime access to our
Technavio Insights
Quick Report Overview:
Cookie Policy
The Site uses cookies to record users' preferences in relation to the functionality of accessibility. We, our Affiliates, and our Vendors may store and access cookies on a device, and process personal data including unique identifiers sent by a device, to personalise content, tailor, and report on advertising and to analyse our traffic. By clicking “I’m fine with this”, you are allowing the use of these cookies. Please refer to the help guide of your browser for further information on cookies, including how to disable them. Review our Privacy & Cookie Notice.
