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VC per capita, Europe: $7, U.S.: $72, Israel: $144. (wsj.com)
58 points by friism on June 14, 2011 | hide | past | favorite | 46 comments

What the article misses is that London with roughly 1% of Europe's population get's 30-40% of the VC financing in Europe.

So based on those figures London's VC per capita is in the region of $200-$300 (London has a similar population size to Israel).

I assume VC per capita is a used as a metric because it's a useful way of assessing how much economic value the whole country can extract from the startup scene, in the same way that GDP per capita is a more useful measurement than total GDP at assessing a country's quality of life. Israel may have a similar concentration of startup companies in a city (like Tel-Aviv) and the math would then work out to a higher per capita VC investment than London.

Actually the start ups in Israel are pretty spread out, the consequence of Tel Aviv's rent being high. Really high.

It's true that most of them are not in Tel Aviv, but they are far from being spread out - they are almost entirely within the a small section that includes Tel Aviv, Ramat Gan, Herzeliya, Natanya and the south end of Haifa - I guess that would cover 90% of Israeli startups (as well as established high tech companies), and about 15% of the Israeli population.

What does that look like if we just do the valley?

Can't find the data for the valley but I imagine it would be in the $1500-$2000 range.

The flipside of this is that Europe should probably not be compared to single countries like the US or Israel.

The comparable entities are North America, the Middle East and Europe. Then things would change.

Individual countries in Europe, particularly the Scandanavians, have loads of small IT companies funded from VC capital and as others have said government grants. The Dutch, the UK and Germany would probably also do reasonalbly well.

The comparable entities are North America, the Middle East and Europe. Then things would change. <-- No, here is why, if you're in Israel you have access to all that it has to offer, same for the US, and same for Europe (EU). The point is 'how much money is there to go around / potential recipient.'

Europe is far less a single economic block than the US or Israel. An American VC is far more likely to invest in a London based startup than one in say Germany, purely because of cultural and language barriers.

In that case wouldn't it be better to compare London to Tel-Aviv?

So what you're saying is that for the majority of cities in the UK the situation is even worse.

Well, that makes me feel better.

London's the heart of the UK's economy. That's why businesses put their sales offices in London, while the real work is done cheaply elsewhere in the country.

This doesn't quite capture the picture because Europe often have public subsidies as well. For instance the publicly owned "Innovation Norway" in Norway has a budget of NOK 1,5 billion, which translates to about US$60 per capita. Most of this is spent on subsidising entrepreneurial ventures.

I definitely see this in indie games. Things like the Nordic Game Fund are really nice compared to what's available in the U.S., although Canada is also pretty generous with funding small videogame startups (especially Quebec, which has additional province-level funding). In the U.S., you can only really make it if you: 1) bootstrap; or 2) target social games or "gamification", which are the only things VCs care about. Companies more in the Playdead (Denmark) vein rarely get funding, although the U.S. does have quite a few bootstrapped success stories--- just looking at Santa Cruz, CA, alone, both Gaijin Games and Team Meat, makers of bit.trip and Super Meat Boy, respectively, are recently bootstrapped and successful.

For early-stage seed funding, there are also all sorts of target-agnostic entrepreneurship programs in Europe, which will kick $20k or something your way if you have anything approximating a reasonable business plan; makes it much easier to just strike out on your own without having to do consulting work to fund it. On the other hand, the fact that the U.S. has more than its share of successful bootstrapped indie-game companies suggests that either the culture or ecosystem is doing something positive there even with VCs being absent.

I wonder how much of Israel's VC money is domestic and how much pours in from the US.

There's some info here but the relevant part seems garbled.


Israel’s venture capital industry has about 70 active venture capital funds, of which 14 international VCs with Israeli offices. Additionally, there are some 220 international funds, including Polaris Venture Partners, Accel Partners and Greylock Partners, that do not have branches in Israel, but actively invest in Israel through an in-house specialist.

In 2009, the Life Sciences Sector led the market with $272 million or 24% of total capital raised, followed by the Software Sector with $258 million or 23%, the Communications sector with $219 million or 20%, and the Internet sector with 13% of capital raised in 2009. [6]

roughly 78%-88% of investments that reached Israeli high-tech companies in 2001-2008 were done either by Israeli VC firms (the 38%-49% above) or by foreign or other entities in syndication with Israeli VC firms: 37%-50%.

> Greylock Partners, that do not have branches in Israel

I'm not sure when that was last updated, but Greylock has had an active Israeli office for more than two years now.

For what it's worth, I've personally met with 3 European angel funds in the past 2 weeks. One of which was actually government backed corporation (that had been given explicit permission to enter Israel)

Annual US Aid to Israel is $382.97 per Israeli and going up.

I'm not sure where you're getting your numbers from. At $30 billion over the next 10 years, per year, US aid to Israel is $412 per Israeli [1]. And of course, that will go down with population increases.

And another thing to note is that that money is in the form of military contracts with American companies. It is not used to pay for Israeli infrastructure or social services AFAIK beyond a separate chunk of money ~$40 million to help pay for Israel's immigration problem [2].

1. http://www.wolframalpha.com/input/?i=3+billion%24+%2F+popula...

2. http://en.wikipedia.org/wiki/File:US_aid_to_Israel.gif (note that economic aid to Israel was stopped in 2007)

"And another thing to note is that that money is in the form of military contracts with American companies"


People are usually oblivious that it's another way of transferring money from the government to the military industrial complex, not just supporting the single democracy in the middle east.

Very true.

Most people don't know but the most controversial weapons that Israel has used in recent years, such as the cluster bombs dropped in Southern Lebanon [1] and the white phosphorous used in the Gaza Strip [2][3] were both made by the US and given to Israel through the US Military Aid program.

[1] http://news.bbc.co.uk/2/hi/5299938.stm

[2] http://www.timesonline.co.uk/tol/news/world/middle_east/arti...

> and the white phosphorous used in the Gaza Strip [2] were both made by the US and given to Israel through the US Military Aid program.

Also very true. And it should be noted that WP usage is legal under international law provided that it is used as a smokescreen and not a weapon [1]. And the reason it is provided by America is because it is used by NATO.

1. http://www.gonzagajil.org/content/view/194/26/

The problem with WP was the way it was used in Gaza:


Yes forgive me if don't trust Amnesty international on Israel (or any Western country for that matter) [1]. Also, WP is legal when used in a civilian area if that's where the battlefield is (Israel did not choose to fight in an urban area, Hamas did). See my same link above.

1. http://en.wikipedia.org/wiki/Criticism_of_Amnesty_Internatio...

It's slightly more complicated than that. No doubt it's a stimulus to defense contractors, but this money also comes with stipulations. For example, Israel is not allowed to sell certain military technologies (of its own invention) to countries like China. It also secures further defense trading with Israel which has about $18 billion allocated per year for defense spending (with $3 billion of that coming from the US). So Israel is encouraged to spend more money beyond that $3 billion on American defense tech and weapons.

Also we give about $1.5 billion to Egypt to spend on American weapons so it's definitely not exclusive to the only democracy in the mid east.

I got my numbers from the bottom of this page which shows that US Aid to Israel is increasing through til 2013:


I got my population number of Wikipedia:


So to sum up... my comment above is correct.

It appears you are correct, though my second point still stands.

I want to see this number for just Silicon Valley.

Well, the SF bay area 2.5% of the country's population (7.5M/300M) and ~50% of the VC, so 25x$72 ~= $1800/person.

Thanks, an order of magnitude larger per capita than Israel, as expected. I wasn't aware of the 50% number and too lazy to Google it!

I don't think that's surprising is it? Silicon Valley is known to be the best place for VC in the world. I'm sure if you draw arbitrary lines around the hottest investment communities in Israel the numbers would also be much more even.

That Israel as a country beats us in per capita investment is an interesting figure which we should all consider.

On the other hand the population of the bay area is quite comparable to that of Israel.

Smaller countries tend to have more specialized and targeted economies. If Israel were to attempt to play in all the industries that the US does, they would do very poorly at almost all of them.

Much of the US economy is in large established technology and manufacturing companies, where VC no longer has a role.

I would expect that for every possible region of Israel, it is possible to find a region of similar population in the bay area that has a higher per capita VC investment.

But Silicon Valley is still far more specialized than Israel.

Most Israelis are not in hi-tech industries, so it is unfair to compare SV to Israel.

It is not surprising, which is why I said "as expected".

I would like to see how the numbers compare for hot cities in Israel vs. the U.S., and I also think we should obviously try to raise the national number. I am not in the valley myself, so that would certainly help me!

Well, what's the VC per capita for Haifa? Why do you think it's interesting to compare the area with the highest concentration of startups in the US to another entire country? Either compare country-to-country or highly concentrated startup area-to-highly concentrated startup area. I doubt there are more startups in Eilat than there are in Boise.

What is the number for Haifa? I genuinely would like to know.

Separately, I am not trying to be a valley-partisan, just noting that the number for silicon valley is much higher than for the country of Israel, as you would expect. I don't even live anywhere near the valley.

Yes, but it's a silly comparison. Israel has areas like the Valley too.

The number for the valley would be even higher if you just took the counties from San Jose to SF, and excluded all of the East Bay, Marin, etc.

Do you happen to know how NYC compares?

The denominator in NYC is very high, so poorly on that metric. It might be closer (though I suspect not particularly close) if you compared VC$/square foot, or VC$/engineer.

All these metrics are but approximations of the impossible-to-measure VC$ available/VC$ sought number that actually matters to startups. I suppose we could compare VC$/GDP$, to get some idea of how much of a nation's economy is based on startups.

Poorly, unless you really like facebook apps.

I have no doubt that VC money is the lowest in Europe of those three. I wonder though how significant this metric really is, especially if the large developping countries of eastern Europe are included. Wouldn't a VC money per startup/founder be more interesting?

Depending on definition Europe can have more than 700 million people and it often includes Turkey and Russia:


But I would think that they are referring to European Union nations???


Also does the VC numbers for Israel include the population of the Israeli occupied territories or just those who have full Israeli citizenship?

Is MS's European chairman genuinely concerned about the European economy and education system? In that case, he might have more success at these goals, by becoming a politician instead.

Or... are these economic observations somehow self serving? Perhaps the lower levels of VC investment in Europe (per capita) are inconvenient for him: Implying European investors should greatly increase their investment levels. Would he be happy if VC levels did increase 10x to US levels... But funds were largely directed at companies that MS did not have involvement with?

Microsoft BizSpark is definitely genuinely concerned about the European startup ecology and education system, and Microsoft itself is large enough that the only way for it to grow/sustain sales is by growing the market as a whole, so yes, the European chairman definitely cares about the European economy and education system. Any big-company executive does.

The whole point of capitalism is that it's both self-serving and public good.

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