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Emily Mendell, NVCA, 610-359-9609,
John Taylor, NVCA, 703-524-2549 ext. 117,
Channa Luma, The Weiser Group, 202-641-6959,


              Companies that Received Venture Funding During their Growth Phases Accounted for
                        10 million jobs and $1.8 trillion in Revenue for the U.S. in 2003

                           States with Strongest Venture Funding Enjoy Highest Growth Rates

July 20, 2004, Washington DC – Jobs and revenues at U.S. companies backed by venture capitalists grew during
the 2000 – 2003 economic downturn, according to a new study conducted by Global Insight and released today by
the National Venture Capital Association (NVCA). Companies that received venture financing between 1970 and
2003 accounted for 10.1 million jobs and $1.8 trillion in revenue in 2003, representing approximately 9.4% of total
U.S. jobs and revenues. These companies registered 6.5% and 11.6% gains in jobs and revenues respectively
between 2000 and 2003 while national employment fell 2.3% and U.S. company revenues rose 6.5%.

“The performance of venture-backed companies during these challenging years demonstrates what venture capital
creates – market leading companies that contribute significantly to the U.S. economy and better withstand difficult
business conditions,” said Andrew Hodge, managing director, North American macroeconomics at Global Insight.
“Venture-backed companies may begin very small but those that succeed go on to define new industry sectors,
changing the way we live and work.”

Prominent U.S. companies that received venture financing during their growth phases include: Microsoft, Federal
Express, AOL, Apple, Office Depot, Intel, Home Depot, Cisco, Compaq, Genentech, Amgen, and Starbucks. More
recent beneficiaries of venture funding include: e-Bay, JetBlue, Seagate, and Google.

“This study is particularly relevant when put in context with the technology bubble of 2001,” said Mark Heesen,
president of NVCA. “In venture capital, failures occur very early on but successes last a very long time. As we can
see, these are the companies that drive economic growth, innovation, and progress. Without venture capital, they
may never have gotten off the ground.”

 The study, entitled “Venture Impact 2004: Venture Capital Benefits to the U.S. Economy,” was commissioned by
the NVCA and conducted by leading economic analysis and forecasting firm Global Insight, Inc (formerly known as
DRI-WEFA). Global Insight constructed a database of more than 20,000 U.S. companies that received venture
capital investment at some point between 1970 and 2003. From this database, Global Insight was able to measure
the number of jobs and revenues these companies contributed to the U.S. economy in the years 2000 and 2003. The
analysis was further broken down by states and industry sectors.
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Venture-Backed Companies Outperform in Job and Revenue Generation in 10 Industry Sectors

The Global Insight study shows that VC-backed companies fared better in job creation and revenue growth than
their U.S. private company peers in 10 separate industries. Even in sectors that suffered net job losses, such as
computer hardware and semiconductors, venture-backed companies were less affected. Not only did ventured
companies grow faster than their national industry counterparts, but the sectors with higher concentrations of VC
financing experienced higher employment growth differentials. The best example is the computer software industry,
where venture-backed firms employed 88 percent of all computer software workers. Also, venture-backed software
companies saw their revenues grow by 31 percent, compared with an overall 5 percent growth rate for the industry
as a whole.

                               National vs. VC Employment and Sales Growth, 2000-2003

      Sector                              Jobs                                       Revenue
                         National Cos.           VC-backed Cos.         National Cos.      VC-backed Cos.
  Biotechnology                  5%                    23%                  22%                28%
Business/Financial               -1%                    4%                  11%                11%
  Communications                -18%                    5%                  -7%                2%
Computer Hardware
    & Services                  -14%                   -1%                   -2%               12%
Computer Software                -8%                   17%                    5%                31%
Healthcare Products              -2%                   16%                    6%                9%
Healthcare Services               9%                  10%                    25%                26%
 Industrial / Energy             -9%                    1%                   .2%                6%
 Retailing & Media               -1%                  12%                     9%                20%
 Semiconductors &               -26%                  -10%                  -21%               -16%
      TOTAL                     -2.3%                  6.5%                  6.5%              11.6%
                                                 Source: Global Insight 2004

Venture Capital Impacts Companies in All 50 U.S. States

From 1970 – 2003 venture capitalists invested $338.5 billion dollars into more than 21,600 U.S. companies. States
where venture capital investment has been the strongest in the last three decades such as California, Texas, and
Massachusetts have produced the most jobs and revenues for the country. Several states that are not necessarily
known for the highest levels of venture investing, but where a venture-backed market leader resides, have made
significant contributions to the national economy as well. Examples include: Washington (headquarters to
Microsoft and Costco); Tennessee (headquarters to Federal Express); and Georgia (headquarters to Home Depot).

                             National Jobs at Originally Venture-Backed Companies in 2003
                                                        Top 15 States

                       Rank             State            Jobs          Cumulative VC Investment*
                                                         2003                  (billions)
                        1          California             2,470,942                         $ 140.1
                        2          Texas                    899,173                            20.5
                        3          Massachusetts            712,329                            35.5
                        4          Pennsylvania             604,045                             9.5
                        5          Georgia                  551,439                             7.2
                        6          Tennessee                543,018                             2.3
                        7          New York                 470,527                            18.4
                        8          Washington               399,863                             9.6
                        9          Virginia                 333,199                             8.6
                        10         New Jersey               310,925                            10.1
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                       11         Florida                     309,717                                  8.2
                       12         Minnesota                   287,984                                  4.3
                       13         Illinois                    235,941                                  7.4
                       14         Ohio                        195,180                                  3.2
                       15         Connecticut                 189,692                                  5.5

                              Source: Global Insight and PwC, TVE, NVCA MoneyTree Survey 2004
                                          * Total VC Investment 1970 – 2003

                                National Revenues at Venture-Backed Companies in 2003
                                                   Top 15 States

                        Rank               State              Revenues               Cumulative VC
                                                            2003 (billions)       Investment* (billions)
                         1            California                        $ 437.8                   $ 140.1
                         2            Texas                               188.1                      20.5
                         3            Massachusetts                       107.4                      35.5
                         4            Washington                          101.5                       9.6
                         5            Pennsylvania                         94.4                       9.5
                         6            Georgia                              91.5                       7.2
                         7            New York                             80.2                      18.4
                         8            Virginia                             63.9                       8.6
                         9            Florida                              60.6                       8.2
                         10           Tennessee                            60.3                       2.3
                         11           Minnesota                            56.9                       4.3
                         12           New Jersey                           49.6                      10.1
                         13           Connecticut                          48.9                       5.5
                         14           Illinois                             34.4                       7.4
                         15           North Carolina                       26.9                       5.8

                               Source: Global Insight and PwC, TVE, NVCA MoneyTree Survey2004
                                             *Total VC Investment 1970 – 2003

While certain states have historically been greenhouses for VC investment, venture capital investment is a national
asset class and spans all 50 states. For example, states such as Missouri, New Hampshire, Utah, and Oregon
realized job and revenue growth at venture backed companies headquartered in their domiciles during the 2000-2003
time period.

            Job and Revenue Growth of Venture Backed Companies Headquartered in Selected States
                                               2000 - 2003

State                                 Job Growth                                  Revenue Growth
Missouri                              4%                                          7%
New Hampshire                         3%                                          8%
Oregon                                4%                                          13%
Utah                                  9%                                          14%
                                                   Source: Global Insight 2004

The study also found a correlation between VC funding and productivity growth. Global Insight found that the
higher the level of venture capital funding per worker in a given state, the more likely that state was to experience
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growth in output per worker. The study found that states in which companies receive the highest levels of venture
funding in turn have the highest wages.

VC-backed Companies Top Contributors to R&D

In addition to jobs and revenues, venture-supported companies, often in conjunction with academic institutions, are
performing a greater share of total U.S. research and development (R&D). Small companies backed by venture
capital were particularly active. According to data from the National Science Foundation, the dollar value of small
company R&D rose from $4.4 billion in 1984 to an estimated $40.1 billion in 2003, a nine-fold increase. The share
of U.S. R&D done by companies with fewer than 500 employees rose from 5.9% in 1984 to 20.7% in 2003. Not
only do these small companies fuel innovation on their own, but they also “feed” larger R&D firms with a steady
stream of idea generation, according to the study. Of the top 50 firms in U.S. R&D, 41 were either originally
venture-backed or were major acquirers of VC-created companies.

U.S. Venture Capital Dominates Globally
A dominant share of the entire world’s total VC dollars, an estimated 72%, is invested in U.S. companies. That is
second only to Israel when adjusted for the relative size of the economies of the two countries. In spite of its wealth,
the U.S. has been able to maintain a high rate of economic growth due to the recurrence of new high-tech investment
opportunities. The U.S. venture capital industry supports more than 40% of the companies entering the public
market via IPOs.

“As a worldwide leader in venture capital investments, the United States is setting the pace for innovation, research
and development, and entrepreneurship,” said Jim Breyer, chairman of the NVCA and managing partner of Accel
Partners in Palo Alto, CA. “We are one of very few countries that have a continuum of VC investors which helps
diversify risk and ensure a steady flow of quality deals, providing excellent opportunities to grow the American
economy,” Breyer added.

A copy of the study highlights can be obtained by contacting Emily Mendell, Director of Public Affairs for NVCA
at Information on the study can also be found at\nvca.

About Global Insight
Global Insight, Inc. ( is a privately held company formed to bring together the two
most respected economic analysis, forecasting and financial information companies in the world, DRI and WEFA.
Global Insight provides the most comprehensive economic coverage of countries, regions and industries available,
using a unique combination of expertise, models, data and software within a common analytical framework to
support planning and decision-making. Global Insight collects and delivers economic and financial information to
clients and also provides a broad range of consulting capabilities. With its April 2003 acquisition of World Markets
Research Centre, Global Insight also provides the world's first same-day analysis and risk assessment service
covering 196 countries and 4 industries, providing insightful analysis of market conditions and key events around
the world. The company has over 3,300 clients in industry, finance and government with revenues in excess of $70
million, over 600 employees and 23 offices in 12 countries covering North and South America, Europe, Africa, the
Middle East and Asia.

About NVCA
The National Venture Capital Association (NVCA) represents approximately 450 venture capital and private equity
firms. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy,
and support entrepreneurial activity and innovation. The NVCA represents the public policy interests of the venture
capital community, strives to maintain high professional standards, provide reliable industry data, sponsor
professional development, and facilitate interaction among its members. For more information about the NVCA,
please visit

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