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.
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.
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.
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.
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%.
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)
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].
"And another thing to note is that that money is in the form of military contracts with American companies"
This.
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.
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.
> 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.
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.
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 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.
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.
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.
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?
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.
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).