Is Venture Capital A Major Creator Of Innovations?

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Governments around the globe have been trying to stimulate economic growth by encouraging entrepreneurship and creating innovations. Many entrepreneurs with brilliant ideas had limited availability of financial resources. For more then thirty years Venture Capital was able to match bright ideas of entrepreneurs with cash-rich investors, benefiting the economy by creating new jobs and generating wealth. This topic is specifically interesting to investigate due to the lack in current research on the question “Is Venture Capital a major creator of innovations in Silicon Valley?” Existing papers have been analyzing the impact of VC on the economies of Israel and European Union, but nothing was specifically related to the technological heart…show more content…
The benefits of VC is not only financial, investors provide an important strategies and guide to success. Silicon Valley is a well known home for startups. Much technological advancement would have never occurred if Venture Capital wouldn’t invest a huge portion of their capital into the region. The first glance at statistics revealed that most of the funds invested into the region have not left the perimeter for over 20 years. Investors are particularly optimistic about the opportunities available in the area. Instead of reallocating funds after projects have come to the end, Venture Capital firms choose to keep their investments in the Silicon Valley constantly searching for new opportunities. Due to this information I would state my hypothesis: Without Venture Capital, Silicon Valley would not be as progressive as it is today. Many of the existing research has concluded that VC plays a significant role in many economies. While entrepreneurship and small businesses plays a tremendous role in the economic growth, it was proven that those that have received capital directly from VC have shown an accelerated development and were able to benefit the economic growth faster than those who got financing elsewhere. Recent research have shown how Israel is successfully adopting the idea of Venture Capital. Economy is benefiting from technological innovations, increase in employment and output, patented technology, and most importantly contributes
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