In particular, the positive growth of public R&d expenditures (1. 8%)was offset by a continuous decline in venture capital investments(-2. 8%).In addition,
and measures the availability of finance for innovation projects by venture capital investments and the support of governments for research and innovation activities by R&d expenditures by universities and government research organisations.
For Venture capital investment data is available for 20 Member States. Changes to the IUS 2013 Although the general methodology of the IUS 2014 remained unchanged there have been three modifications as compared to the IUS 2013.
At the request of the European council to benchmark national innovation policies and monitor the EU's performance against its main trading partners, the European commission has developed a new indicator on innovation output
2011 Finance and support 1. 3. 1 R&d expenditure in the public sector as%of GDP Eurostat Eurostat 2005 2012 1. 3. 2 Venture capital investment as%of GDP
Estonia's strong performance has to be interpreted with care as the score for this dimension is based on one indicator only (R&d expenditures in the public sector) as data on venture capital investments are not available.
in particular due to a strong decline in Venture capital investments(-2. 8%)and Non-R&d innovation expenditures(-4. 7%).3. 2 EU growth performance For the EU innovation
Performance has worsened in Non-R&d innovation expenditures and to a lesser extent also in Venture capital investments, SMES with marketing and/or organisational innovations and Fast-growing innovative firms.
Bulgaria has performed below the average of the EU. The weakest indicators are Venture capital investments and Non-EU doctorate students.
Strong declines in growth performance are observed in Venture capital investment and Non-R&d innovation expenditures. Note:
Non-R&d innovation expenditures and R&d expenditures in the public sector. Relative weaknesses are in Non-EU doctorate students and in Venture capital investments.
A strong decline is observed in Venture capital investment and Non-R&d innovation expenditures. Note: Performance relative to the EU where the EU=100.46 Innovation Union Scoreboard 2014 Denmark is an Innovation leader.
Relative weaknesses are in Non-EU doctorates students, Venture capital investments and License and patent revenues from abroad.
Most notable growth declines are observed in Non-R&d innovation expenditures Venture capital investments and Sales share of new innovations.
No data for Venture capital investments. Innovation Union Scoreboard 2014 49 Ireland is an Innovation follower.
Community designs, Venture capital investments and R&d expenditures in the business sector. Greece performs above the EU average on International scientific copublications, Sales share of new innovations and SMES with Marketing and/or Organisational innovations.
Growth has declined in Non-R&d innovation expenditures and Venture capital investments. Note: Performance relative to the EU where the EU=100.
The largest growth decline is observed for Venture capital investment. Other notable declines are in SMES innovating in-house and in Community designs.
No data for Venture capital investments. 54 Innovation Union Scoreboard 2014 Italy is a Moderate innovator.
Growth declines are observed in Venture capital investments, Non-R&d innovation expenditures, Community designs and Employment in knowledgeintensive activities.
No data for Venture capital investments. 56 Innovation Union Scoreboard 2014 Latvia is a Modest innovator.
No data for Venture capital investments. Innovation Union Scoreboard 2014 57 Lithuania is a Moderate innovator.
No data for Venture capital investments. 58 Innovation Union Scoreboard 2014 Luxembourg is an Innovation follower.
Relative strengths are in International scientific copublications, community trademarks, Venture capital investments and in Community designs.
No data for Venture capital investments. Innovation Union Scoreboard 2014 61 The netherlands is an Innovation follower.
Relative weaknesses are in Non-EU doctorate students and Venture capital investments. Strong increases in growth are observed for Community trademarks
Large declines in growth are observed in Non-R&d innovation expenditures, New doctorate graduates and Venture capital investments.
Strong declines are observed Non-R&d innovation expenditures, R&d expenditures in the business sector, Non-EU doctorate students and Venture capital investments.
No data for Venture capital investments. Innovation Union Scoreboard 2014 67 Slovakia is a Moderate innovator.
No data for Venture capital investments. 68 Innovation Union Scoreboard 2014 Finland is an Innovation leader
but slightly declined in 2013, in particular due to declining venture capital investments. The performance relative to the EU has been declining over the whole period from 148%in 2006 to 135%in 2013.
Strong declines in growth are observed for Venture capital investments and Sales share of new innovations. Notes:
No data for Venture capital investments, Non-R&d innovation expenditures and SMES innovating in-house. 10 Over the whole 2006-2013 period Community trademarks grew strongly as shown in the graph showing the growth rates per indicator.
Large growth declines are observed in Community designs and Venture capital investments. Notes: Performance relative to the EU where the EU=100.
No data for Venture capital investments, PCT patent applications in societal challenges and Employment in fast-growing firms of innovative sectors.
No data for International scientific co-publications, Most cited scientific publications, Venture capital investments, PCT patent applications,
No data for Venture capital investments. Innovation Union Scoreboard 2014 77 6. Innovation Union Scoreboard methodology Step 1:
Venture capital investments, Publicprivate co-publications, PCT patent applications, PCT patent applications in societal challenges and License and patent revenues from abroad.
, 34 0, 51 0, 66 0, 49 0, 43 1. 3. 2 Venture capital investments 0, 277 0, 307 0, 038
1. 3. 2 Venture capital investments 0, 277 0, 300 0, 134 0, 234 0, 213 0, 137 0, 310 0
, 4%12,9%-2, 1%1. 3. 2 Venture capital investments-2, 8%-1, 1%-17,5%-12,0%-1, 3%-1, 6%-1
7%-0, 5%3, 3%-0, 4%0, 6%2, 6%10,9%-0, 7%1. 3. 2 Venture capital investments-2
Eurostat Eurostat 1. 3. 2 Venture capital(%of GDP) Venture capital investment is defined as private equity being raised for investment in companies.
Venture capital includes early stage (seed+start-up) and expansion and replacement capital Gross domestic product The amount of venture capital is a proxy for the relative dynamism of new business creation.
In particular for enterprises using or developing new (risky) technologies venture capital is often the only available means of financing their (expanding) business.
Eurostat Eurostat Comment: Two-year averages have been used 2. 1. 1 R&d expenditure in the business sector(%of GDP) All R&d expenditures in the business sector (BERD) Gross domestic product The indicator captures the formal creation of new knowledge
1. 3. 1 Public R&d expenditures as%of GDP Identical Eurostat 2005 2009 1. 2. 2 Venture capital as%of GDP 1. 3. 2 Venture capital
Eurostat 1. 3. 2 Venture capital(%of GDP) Numerator: Venture capital investment is defined as private equity being raised for investment in companies.
Management buyouts, management buyins, and venture purchase of quoted shares are excluded. Data are broken down into two investment stages:
The amount of venture capital is a proxy for the relative dynamism of new business creation.
or developing new (risky) technologies venture capital is often the only available means of financing their (expanding) business.
Venture capital is a highly volatile indicator: two-year averages have been used to reduce volatility rates. This is a highly skewed indicator
Eurostat (EVCA (European Venture capital Association) is the primary data source for VC expenditure data) 9 2. 1. 1 Business R&d expenditures(%of GDP) Numerator:
The indicator Venture capital has the lowest data availability in the database (69%across all Countries.
UK-1. 3. 1 Public R&d expenditure-IS IS IS IS 1. 3. 2 Venture capital LU LU LU, UK LU, UK LU 2. 1
Non-EU doctorate students (1. 23), Venture capital (1. 89), Non-R&d innovation expenditure (1. 67), Public-private co-publications (1
Non-EU doctorate students, Venture capital, PCT patents in societal challenges and License and patent revenues from abroad.
IE ROEE PT LU 37 1. 3. 2 Venture capital(%of GDP) Venture capital as a%of GDP 0. 000 0. 050 0. 100 0. 150 0
The amount of venture capital is a proxy for the relative dynamism of new business creation.
or developing new (risky) technologies venture capital is often the only available means of financing their (expanding) business.
expansion and replacement would provide a better picture on the availability of a domestic venture capital industry
For several countries data are not available as the domestic Venture capital markets are too small to collect such data.
The availability of venture capital differs widely in Europe. Only in Luxembourg Sweden and the UK venture capital represents more than 0. 2%of GDP.
Growth performance Growth performance is diverse with increases over time in 10 countries and decreases in 12 countries plus the EU27.
%The availability of venture capital has been declining rapidly in Austria, Denmark, Hungary, Ireland and Spain. Venture capital as a%of GDP-40%-30%-20%-10%0%10%20%30%40%50%HU DK AT IE ES PT CZ PL SE NO EU
NL UK SK DE LU IT FR BG FI RO CH BE GR 38 2. 1. 1 Business R&d expenditures(%of GDP) Business
benchmark them with non-European poles, observe their dynamics and offer a thorough analysis of their characteristics.
and a large and integrated market (including venture capital). The Amazon case shows the importance of the business environment, the existence of a single market and the efficiency of services.
Second, in the web services sub-sector, a successful venture will reach break even and commercial viability relatively quickly, usually less than five years.
Both niche players and globally successful European ventures are attractive targets for acquisition. Skype, for instance, is an example of a successful European web start-up that achieved global pre-eminence
VCS and others who can support nascent ventures in a variety of ways, for instance, identifying specialist staff to manage large data centres
They combined this with the Estonian engineering talent that they had identified already in a previous venture to start Skype.
The availability of venture capital and experienced venture capitalists continues to be a problem in the EU. Moreover
So if there is to be government support for new ventures in the web services sub-sector (with support for clusters, tax-breaks,
with large amounts of capital (in the hundreds of millions of Euros) becoming available for medium high-risk ventures from the sovereign wealth funds typically from the Middle east,
in 2007 its US venture capital investors became aware that considerably more capital investment was likely to be needed,
The US Small Business Innovation Research (SBIR) programme provided significant funds for the company in its early stages rather than business angel or venture capital.
This was because the venture was considered too risky for venture capital investors. What we were trying to do was so risky that no rational investor would give us money, recalls Colin Angle
Thus private venture capital is not suitable for funding because of its demand for rapid returns from medium/low risk ventures.
Financial capital Venture capital The traditional sources for company financing of long term innovative investment are: Retained earnings;
Venture capital. Government subsidies: grants, loans, guarantees, tax concessions, VC ownership, 100%or less. In this section we mostly discuss the role of venture capital in funding web applications in the USA
and in EU. As we see in our case study, Apple computer was seeded by Mike Markkula, an ex-marketing manager for Intel,
if the venture is lucky, across the valley of death into first commercial sales. Yet, as Hall and Lerner (2010) point out,
small and new innovative firms experience high costs of capital that are mitigated only partly by the presence of venture capital;
there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets are developed not highly.
those public firms supported by venture funding employed 6%of the total public-company workforce most of these jobs high-salaried, skilled positions in the technology sector.
Why Public Efforts to Boost Entrepreneurship and Venture capital Have failed--and What To do About It (pp. 59-60.
US venture funds enjoyed average internal rates of return (IRRS) that were higher than those of the EU,
Most SWFS use foreign exchange assets, 18 usually for investing in large infrastructure ventures or to take equity in major, stable corporations.
VCS will tend to view any new venture through the lens of potential litigation from patent holders
1999). 23 Recent work shows how"econometric estimates indicate that entrepreneurial ventures collaborating with the OSS community exhibit superior innovation performance compared with their non-collaborating peer"(Piva, Rentocchini and Rossi-Lamastra, 2012),
therefore indicating that collaborations with the OSS community should exert a positive effect on entrepreneurial ventures'innovation performance. 24 Berkeley Software Distribution a free open source licensed version of the Unix operating system from the Regents of the University
and also the key funding for the various stages of start-up, perhaps with the formation of venture capital firms.
if eventually the result is ownership or part ownership in a successful venture. Employment is seen as a transient state,
something that may be necessary between entrepreneurial ventures. Thus there is a tradition of workers moving between start-ups, a mechanism
in terms of the laws around bankruptcy but also in terms of not denying support for a new venture when a previous one has failed.
venture capital may be less likely to have the scale in time and magnitude of investment for complex technological innovation
professional venture managers and (patient) long-term funding for a much longer term than typical for VC funding or government programmes, may offer a useful way forward.
however, venture capital may be less likely to have the scale in time and magnitude for complex technologies that require longer-term investment.
but also in terms of not denying support for a new venture simply because a previous one failed.
and a large and integrated market (including for venture capital). The Amazon case shows the importance of the business environment, the existence of a single market and efficiency of services.
the design of effective‘public venture capital'programmes, The Economic Journal, 112 (477. Lerner, J. 2009), Boulevard of Broken Dreams, Princeton university Press, NJ.
Venture capital Performance in the UK and the US, Research report, NESTA, June, http://www. nesta. org. uk/library/documents/Atlanticdrift9. pdf Mason, C. and Harrison
: UK Government Support for Early-stage Venture capital, September, http://www. nesta. org. uk/library/documents/Thin-Markets-v9. pdf OECD (2011
A.,Pukthuanthong, K.,Rummer, M. and Walker, T. 2007), Venture capital in Europe: closing the gap to the US.
In Gregoriou, G.,Kooli, M. and Kraeussl, R. eds), Venture capital in Europe, Butterworth-Heinemann, Burlington, MA.
How interactions with the Open source community impact on the innovative performances of entrepreneurial ventures, Journal of Small Business Management, 50,340 364.
http://www. pwc. lu/en lu/lu/doing-business-in-luxembourg/docs/pwc-luxloc. pdf Rayna, T. and Striukova, L. 2009) Public venture capital:
with major investors including the venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.
In 2003, Bessemer Venture Partners led the A round financing at Skype. Bessemer, the oldest venture capital practice in the United states invested $1 to $2 million in August 2003.
A second investment round in March 2004, led by venture capital firms Draper Fisher Jurvetson and Index Ventures, resulted in $18. 8 million in new funding to expand global operations
and enhance its consumer offering. 47 So even though Skype was located in Europe and the entrepreneurial impetus and the engineering innovation were found there,
the early stage funding came from Silicon valley. Looking back on the start up of Skype Zennström said he started his new venture capital business Atomico
because the venture capital market outside of Silicon valley lags when it comes to funding innovative technologies.
As he saw from his own days as an entrepreneur,"In Europe, none of the venture capitalists had entrepreneurial backgrounds.
Investment tax credits of 10%of the acquisition value of investments New business tax credits-a 25%exemption on corporate income tax and municipal business tax for 8 years Venture capital certificates
In 1992, Friend founded CDT Ltd, with support from the university and funding from local seed venture capital fund
The case of advanced materials ventures, Research Policy, 2006 Plastic Logic: from innovation to impact, http://www. cam. ac. uk/research/features/plastic-logic-from-innovation-to-impact/77 CDT CEO talks to Electronics Weekly after Sumitomo sale,
This was one of the biggest venture capital rounds ever in Europe. Led by Oak Investment Partners and Tudor Investment, the existing investors Amadeus (seed funding) Intel Capital, Bank of america,
BASF Venture capital, Quest for Growth and Merifin Capital also participated. While R&d remained in Cambridge, product development moved to Mountain view, CA, with the corporate headquarters.
-so the basic technology was still valuable enough to merit persisting with the venture. Plastic electronics promise economic,
through the venture capital arm of the Samsung Group, Samsung Venture Investment Corporation (SVIC). Previously, in a second round of funding, Novaled Gmbh had secured €15 Million, on 01 december 2005,
On 14 may 2003, Novaled Gmbh secured €5. 75 million in first round financing from a consortium of international investors led by venture capital firms Technostart and Techfund 83 Capital Europe.
E Ink Corporation Announces $37 Million in Second Round of Venture Financing; New Investment from Domestic and International Media Companies, Leading Funds and Existing Investors, Business/Technology Editors CAMBRIDGE, Mass.
Funding for their vision didn't come from venture capital but rather from the SBIR Program
It is interesting to note that two of the three founders of irobot have recently left to start new ventures, currently in‘stealth'mode Heartland Robotics,
72 5. 2. 2 Venture capital Financing of ICT Firms...74 5. 2. 3 ICT Patents...
134 8. 8 Venture capital: Venturesource by Dow jones...135 References...136 7 1. Introduction This is the third EIPE Report.
48 Venture capital financing to ICT firms Agin 2 14 ICT patents Agin 3 9 Internationalisation International co-inventions Intin 1 45
15 Venture capital financing to ICT firms Agin 2 1 ICT patents Agin 3 372 Internationalisation International co-inventions Intin 1 561
Venture capital financing to ICT firms Agin 2 2 ICT patents Agin 3 49 Internationalisation International co-inventions Intin 1 121 Networking Degree
1 19 Venture capital financing to ICT firms Agin 2 20 ICT patents Agin 3 21 Internationalisation International co-inventions Intin 1
. 2. 2 Venture capital Financing of ICT Firms Table 51: Top ranking regions according to Venture capital financing of ICT firms indicator Rank NUTS3 Code Region name Indicator Value EIPE Rank 1 UKI12 Inner
London-East 100 2 2 FR101 Paris 80 3 3 UKH12 Cambridgeshire CC 79 5 4 DK011 Byen Kobenhavn 70
Stadtkreis 22 21 Indicator description Indicator ID Agin 2 Name of indicator Venture capital financing to ICT firms What does it measure?
Measures the amount of venture capital invested in the ICT sector Unit of measurement Region's share in the total VC funding in to ICT firms in the EU to a region's share in the EU population Definition of ICT dimension Based on
the Dow jones classification of industry segments Unit of observation NUTS 3 Source Venture capital: Venturesource by Dow jones (Section 8. 8) Reference year (s) considered 2000-2012 75 Figure 41:
Frequency of the Venture capital financing of ICT firms indicator values 1130 73 47 20 7 9 1 3 1 3 3 2 1
1 1 1 0 500 1000 Frequency 0 20 40 60 80 100 Venture capital financing of ICT firms Table 52:
Descriptive statistics of Venture capital financing of ICT firms indicator Number of observations Mean value Standard deviation Variance 1303 2. 43 7. 73 59.71 76 5. 2
ICT Innovation Agglomeration indicators (Agin) Indicator ID Agin 1 Agin 2 Agin 3 Name of indicator Investment in intangibles by ICT firms Venture capital
Orbis by Bureau Van dijk (Section 8. 7) Venture capital: Venturesource by Dow jones (Section 8. 8) Patent data:
It is a benchmark for government and private sector organizations wishing to identify trends in jobs and industries, business and investment.
Benchmark regions and develop location strategies, Undertake in depth, wide-ranging data analysis; for example: Which is Europe's most popular location for headquarters investments?
Time coverage between and 2011, the last available date. 8. 8 Venture capital: Venturesource by Dow jones Dow jones Venturesource provides comprehensive data on venture-backed and private equity-backed companies including their investors and executives in every region, industry sector and stage of development
throughout the world. This database contains information on venture capital transactions, the financed companies and the financing firms.
The data are reported largely self y VC firms, but several plausibility checks are conducted by the database providers.
and compare it with an alternative source of information which is Venture Economics, the Venturesource data are generally more reliable, more complete,
and less biased than the Venture Economics data. 10 Primary codes only include: 261-Manufacture of electronic components and boards, 262-Manufacture of computers and peripheral equipment, 263-Manufacture of communication equipment, 264-Manufacture of consumer electronics, 268-Manufacture of magnetic
'How Well do Venture capital Databases Reflect Actual Investments?''In SSRN (Ed.).Nepelski, D. & De Prato, G. 2013a.'
36 5. 8 Venture capital: Venturesource by Dow jones...37 6 Annex: Technical issues...39 6. 1 Definition and characteristics of a network structure...
which new enterprises receive, e g. venture capital. Venture capital funds may invest in the later stages of product development
or market launch and, hence, offer a way of measuring the outcome of the innovation process in its final stage.
overall investments in intangibles by ICT companies and venture capital financing of ICT start-ups. Business activities These activities relate to the production of tangible and intangible goods
R&d expenditures, venture capital funding, company location investment or the number of ICT companies, the NACE Rev 2 definition of the ICT sector is used (OECD, 2007.
a range of the most reliable and recognized data providers were tested carefully and selected, such as Thomson Reuters for bibliometrics, Bureau Van dijk for company-level information, Dow jones for venture capital data, etc.
3 17 Eigenvector centrality in ICT R&d network Netrd 4 18 Innovation Agglomeration Investment in intangibles by ICT firms Agin 1 19 Venture capital
and venture capital investments) and outputs (patenting activity) of innovation activities. With venture capital data we aim to capture indirectly the dynamics of emerging new innovative companies:
at the time of publication of this report, there was no serious European-wide collection of data on these dynamics.
ICT Innovation Agglomeration indicators (Agin) Indicator ID Agin 1 Agin 2 Agin 3 Name of indicator Investment in intangibles by ICT firms Venture capital
Measures the average annual amount spent on intangibles in the ICT sector Measures the amount of venture capital invested in the ICT sector It measures the amount of ICT patent applications with inventors residing in the region Unit of measurement Region
ORBIS by Bureau Van dijk (see Section 5. 7) Venture capital: Venturesource by Dow jones (Section 5. 8) Patent data:
see Section 5. 7. Over 26,000 venture capital deals executed in Europe in the ICT sector between 2000 and 2012,
ORBIS by Bureau Van dijk, 8. Venture capital: Venture Source by Dow jones. In the following sections, each of the data source is described. 5. 1 QS WORLD UNIVERSITY RANKINGS by QS The rankings of Universities
It is a benchmark for government and private sector organizations wishing to identify trends in jobs and industries, business and investment.
Benchmark regions and develop location strategies, Undertake in depth, wide-ranging data analysis; for example: Which is Europe's most popular location for headquarters investments?
This dataset serves for the following analysis that aims to benchmark R&d investments of EU ICT companies against those of non-EU companies.
In addition, there are significant problems concerning the extraction of detailed information, e g. on a firm's ownership structure. 5. 8 Venture capital:
Venturesource by Dow jones Dow jones Venturesource provides comprehensive data on venture capital-backed and private equity-backed companies including their investors and executives in every region, industry sector and stage of development
2002), who provide a detailed overview of this database and compare it with Venture Economics (an alternative source of information),
This database contains information on venture capital transactions, the financed companies and the financing firms. The data are reported largely self by venture capital firms,
but the database conducted several plausibility checks. The selection of ICT companies was based on Dow jones classifications
because it offers unique and standardized information on venture capital deals with all the detailed information concerning the financed
Venturesource relies on the voluntary information provision by Venture capital funds and companies. Thus despite being up-to-date,
there is no guarantee that it covers the entire universe of venture capital. 39 6 Annex: Technical issues 6. 1 Definition and characteristics of a network structure Design A straightforward way of representing the existing networks linking NUTS3 regions is by drawing a line connecting two different regions
How Well do Venture capital Databases Reflect Actual Investments? Kominers, S. 2013. Measuring agglomeration. Boston: Harvard university.
What is different with respect to venture capital funding? Or perhaps there is a lack of connectivity between the universities
On the other hand, new paradigm creation is driven by massive venture capital investments in long term R&d which necessitates a high level of knowledge privatization.
National Innovation Office RDI Observatory's survey, 20120%20%40%60%80%100%By promoting technology transfer By strengthening the protection of intellectual property rights By relying on venture capital
By providing education and training By relying on venture capital and JEREMIE funds By strengthening the protection of intellectual property rights By promoting technology transfer By comparing EU-27 countries individually,
in order to co-develop indicators and benchmarks for ICT-ELI. 122 55.7 48. Taking the initiative (e g. forming cross-sector working groups
in order to codevelop indicators and benchmarks for ICT-ELI. Following the Open Method of Coordination*for identifying common challenges and opportunities,
and benchmarks for ICT-ELI. 3. 3 4. 1 8. 2 5. 7 23.0 32.0 23.8 55.7 Taking the initiative (e g. forming cross-sector working groups
in order to codevelop indicators and benchmarks for ICTELI.**5. 57 53 5. 52 27 5. 4 25 4. 12 17 (1. 41)( 1. 42)( 1. 32)( 2. 12
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