If you think venture capital funding is just something that United States businesses rely on, you would be mistaken. It may have originated in the U.S., but many countries all over the world are quickly gravitating towards this means of business funding.
In 2008, there was a five percent increase in venture capital funding made in non-U.S. companies. Most of these were in China and Europe. However, each country has slightly different ways of conducting venture capital funding.
Because of the great tax incentives offered through an investment tax credit program known as Scientific Research and Experimental Development (SR&ED), technology, companies in Canada have been reaping the benefits of venture capital funding from all around the world.
Basically, any Canadian company that is conducting research and development will get a refundable tax credit equivalent to twenty percent of expenditures like labor, material and equipment. There is a thirty-five percent refundable tax credit for some smaller private corporations, but the rule is that they must have a fifty percent minimum ownership by Canadians. This is not the most attractive deal for non-Canadian investors since they would be required to take a much smaller percentage in the company. However, the SR&ED does not have this type of restriction.
There is also the (LSVCC) which is sponsored by the labor unions. They also offer tax breaks for investors who purchase the funds.
In 2006, the United Kingdom, France and Germany were the biggest receivers of venture capital funding. The numbers in Europe continue to grow as the second quarter of 2007 brought a five percent growth (€1.14 billion) in venture capital funding.
In 2006, private equity and venture capital in India was equivalent to $7.5 billion from nearly three hundred deals that were made. When it comes to venture capital investing in India, the investment can be in equity, partial equity and/or a loan that is conditional so it can promote a high-risk or high-tech company.
Venture capital in India follows the mantra of high risk, high return. Many venture capitalists in India thrive on investing in these high risk businesses in order to encourage and support technological innovation.
Other Parts of the World
The Middle East, North Africa and Southern Africa are all in the early stages of venture capital funding. In Southern Africa, in particular, funding is very difficult to get even if a company seems well on its way to being highly successful. But as of now, venture capital investing in Southern Africa is getting off to a very slow start.
What may be somewhat surprising is that Israel is setting out to be a leader in venture capital. In 2010, they actually were the world leader in venture capital in terms of money invested per capita ($170 per person vs. $75 per person in the United States). Two-thirds of invested funds came from other countries and the rest from Israeli venture capitalists.
Venture capital may have started in the west, but it is quickly making its migration to parts far and wide. While countries strive to be leaders in technological advancement, acquiring venture capital will become even more competitive, as start-up companies all around the world aggressively go after valuable venture capital funding that can skyrocket their businesses to the top.