NESTA, a UK based non-profit organization, recently released a report analyzing the performance of venture capital in the UK and the US. It warns that the UK comes short. Just a few years ago Nesta found that the investment gap had narrowed in the 2000s but its latest report shows, the gap is starting to widen again. When measured as a proportion of GDP, UK venture capital is less than half the size of the US industry.
UK venture capital investment amounts to around 0.1 per cent of GDP, as compared to around 0.2 per cent in the US. If it were possible to raise UK venture investing to the same level as the US, VC investment in the UK would be USD2 billion higher every year. Returns of UK venture funds are also worse than those of their US counterparts.
The report sets out some of the reasons behind the UK-US performance gap. It also examines which factors influence US funds’ decisions to back UK start-ups, with a particular focus on the role regulation might play in encouraging US venture investments in the UK. (Image Source: NESTA)