Venture Capital Market Growth, Analysis, Size by 2031

The venture capital market size is expected to grow from US$ 453.7 billion in 2023 to US$ 739.66 billion by 2031; it is anticipated to expand at a CAGR of 6.3% from 2023 to 2031. The venture capital market includes growth prospects owing to the current venture capital market trends and their foreseeable impact during the forecast period. An increasing number of startups, and industrialization and globalization are some of the factors driving the market growth. However, market volatility and regulatory challenges are restraining the market growth.

Venture Capital Market Analysis

Venture capital (VC) represents a subset of private equity that provides funding for start-ups and small enterprises with prospects for sustained expansion. Investment banks, financial institutions, and investors are the usual sources of venture capital. Venture capital (VC) funds startups and small businesses that investors think have significant development potential. Private equity (PE) is the usual form of financing. Through independent limited partnerships, ownership positions are sold to a select group of investors. Whereas PE typically funds established businesses looking for an equity injection, venture capital typically concentrates on developing businesses. Venture capital (VC) is a vital source of funding, particularly for start-ups that do not have access to bank loans, capital markets, or other forms of debt. Seed-stage, early-stage, and late-stage funding are the three types of venture capital.  

Globalization has evolved in recent decades as a result of the expansion of commercial and financial networks that cross national borders, making businesses and workers from other economies increasingly interconnected. Greater globalization creates more chances for international investments, resulting in more investment-linked programs. Moreover, industrialization also facilitates increased investments, cross-broader collaborations, partnerships, and joint ventures, facilitating venture capital market growth.

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Venture Capital Market: Strategic Insights

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Venture Capital Industry Overview

• Venture capital offers financial support to startups that lack the necessary cash flow to incur debt. Because investors acquire equity in potential companies and businesses receive the funding they require to jumpstart their operations, this arrangement may be advantageous to both parties.

• VCs frequently offer networking and mentoring services to assist in locating advisers and talent. Having solid venture capital backing can help businesses make more investments.

• However, a business that accepts venture capital support can lose creative control over its future direction. Venture capitalists (VCs) are likely to want a sizable portion of the company's stock and might even put pressure on the management team.

• Many VCs may put pressure on the company to exit quickly because their main goal is to achieve a quick, high-return payout.

Venture Capital Market Driver

Increasing Number of Startups to Drive the Venture Capital Market

• Accessibility to technology and resources growing culture of entrepreneurship and innovation are making it easier for individuals with ideas to turn them into viable businesses. For instance, according to SBA, in 2022, 30.2 million small businesses were operating and 1,000 active unicorns in the US.

• According to CB Insights, as of January 2024, there are over 1,200 billion-dollar unicorn startups in the world. Moreover, according to Microsoft, 50 million new startups are established every year. That means, on average, 137,000 startups are launched every day.

• As more entrepreneurs launch startups with innovative ideas, they seek funding to grow their businesses.

• Venture capitalists, drawn by the potential for high returns, invest in these startups in exchange for equity. This influx of capital fuels the growth of startups, allowing them to expand their operations, develop new products, and enter new markets.

• As successful startups generate returns for investors, more capital is attracted to the venture capital market, creating a cycle of growth.

• The success stories of well-known startups further fuel this cycle, inspiring more entrepreneurs to take the leap and seek funding, thus driving the venture capital market growth.

Venture Capital Market Report Segmentation Analysis

• Based on type, the venture capital market is segmented into local investors and international investors.

• The local investor segment is expected to hold a substantial venture capital market share in 2023.

• Local investors often have a deeper understanding of the local market dynamics, regulations, and cultural nuances, which can give them an edge in identifying promising investment opportunities.

• On the other hand, international investors may bring broader networks, diverse perspectives, and access to larger pools of capital, which can be advantageous for startups looking to scale globally.

Venture Capital Market Share Analysis By Geography

The scope of the venture capital market is primarily divided into five regions - North America, Europe, Asia Pacific, Middle East & Africa, and South America. North America is experiencing rapid growth and is anticipated to hold a significant venture capital market share. The region's significant economic development, growing population, and increasing number of startups requiring venture capital have contributed to the growth of the market.

Venture Capital Market Regional Insights

The regional trends and factors influencing the Venture Capital Market throughout the forecast period have been thoroughly explained by the analysts at Insight Partners. This section also discusses Venture Capital Market segments and geography across North America, Europe, Asia Pacific, Middle East and Africa, and South and Central America.

Venture Capital Market Report Scope

Venture Capital Market Players Density: Understanding Its Impact on Business Dynamics

The Venture Capital Market market is growing rapidly, driven by increasing end-user demand due to factors such as evolving consumer preferences, technological advancements, and greater awareness of the product's benefits. As demand rises, businesses are expanding their offerings, innovating to meet consumer needs, and capitalizing on emerging trends, which further fuels market growth.

Market players density refers to the distribution of firms or companies operating within a particular market or industry. It indicates how many competitors (market players) are present in a given market space relative to its size or total market value.

Major Companies operating in the Venture Capital Market are:

1. Tiger Global Management
2. New Enterprises Associates
3. Sequoia Capital
4. DST Global
5. IDG Capital

Disclaimer: The companies listed above are not ranked in any particular order.

The "Venture Capital Market Analysis" was carried out based on type, industry, and geography. On the basis of type, the market is segmented into local investors and international investors. Based on industry, the venture capital market is segmented into real estate, financial services, food & beverages, healthcare, transport & logistics, IT & ITeS, education, and others. Based on geography, the market is segmented into North America, Europe, Asia Pacific, the Middle East & Africa, and South America.

Venture Capital Market News and Recent Developments

Companies adopt inorganic and organic strategies such as mergers and acquisitions in the venture capital market. A few recent key market developments are listed below:

 

• In November 2023, IBM announced the launch of a US$ 500 million venture fund to invest in a range of AI companies - from early-stage to hyper-growth startups - focused on accelerating generative AI technology and research for the enterprise.

[Source: IBM Corporation, Company Website]

• In September 2023, Amazon Catalytic Capital announced it had invested in four new venture capital funds, bringing its total portfolio to eight funds.

[Source: Amazon, Company Website]

Venture Capital Market Report Coverage & Deliverables

The venture capital market forecast is estimated based on various secondary and primary research findings, such as key company publications, association data, and databases. The market report "Venture Capital Market Size and Forecast (2021–2031)" provides a detailed analysis of the market covering below areas-

• Market size & forecast at global, regional, and country levels for all the key market segments covered under the scope.
• Market dynamics such as drivers, restraints, and key opportunities.
• Key future trends.
• Detailed PEST & SWOT analysis
• Global and regional market analysis covering key market trends, key players, regulations, and recent market developments.
• Industry landscape and competition analysis covering market concentration, heat map analysis, key players, and recent developments.
• Detailed company profiles.