Venture capital investment is defined as private equity capital used for investing into companies. For small and medium-sized entities access to venture capital investment is highly important with regard to growth and employment. The amount of venture capital being available in proportion to GDP varies in the single EU member states. And this amount is also an important indicator for the financial possibilities of newly founded small and medium-sized companies in their starting and innovation stages.
On this subject Eurostat, the EU´s statistical office, published comparative figures for the year 2004 in 15 old members states (EU15) at the end of November 2006. The figures for venture capital investment are subdivided into two investment phases: early stage on one side and expansion/modernization stages on the other.
Early-stage venture capital investment is made in the kick-off or starting phase, i.e. prior or during the foundation of a company. In the EU15 these venture capital investments amounted to 0.02 percent of GDP with the biggest shares in Denmark (0.09 percent), Sweden (0.08 percent) and Great Britain (0.05 percent).
Venture capital investment in the expansion and modernization phases support companies at a later development stage. Expansion capital helps to finance growth and expansion of a company which is not yet profitable or has just broken even, whereas modernization investment is the acquisition of company shares from another private capital investment company or share holder. In the EU15 this type of venture capital investment amounted to 0.09 percent of GDP and therefore exceeded the early-stage investments. Thus, the highest figures available for this kind of investment were 0.18 percent for Great Britain, 0.16 percent for Sweden and 0.15 percent for Spain.