Over the past five years, venture capital -backed companies have outperformed other enterprises, according to new research. 'Exploring the success of venture capital-backed companies' - a report produced by Experian for the BVCA - tracked the performance of a sample of companies backed by venture capital (VC) since 2006, and compared it with a benchmark sample of comparable companies, based on size and sector.
25 January 2012
Key findings include:
• Venture capital-backed businesses showed stronger turnover growth between 2006 and 2010 than other enterprises, with VC-backed companies trebling sales compared with more modest growth at comparable companies. Profit growth was also stronger at VC-backed businesses.
• Job creation was also much stronger within VC-backed companies, with an 80% rise in employment over the four year sample period. In comparison, other enterprises saw very little change in overall employment numbers.
• Overall, gross profit margin at VC-backed companies was broadly comparable with other enterprises. Turnover per employee - a proxy for productivity - was also broadly similar over the sample period as a whole.
Colin Ellis, Chief Economist of the BVCA, said: "This study looks at a matched sample of VC-backed companies with other enterprises in the UK; these data can be very difficult to find. The study shows that VC-backed businesses have outperformed their peers, but without enjoying vastly higher margins. This suggests that VC-backed companies are good at winning market share, thereby putting themselves on a sustainable footing going forwards."
Adam Swash, Head of Strategy and Research at Experian, said: "This report shows the impact venture capital can have and shows the importance of venture capital has for the future growth of UK plc. "