Innovation
Venture Capital (Later Stage)
Description: This indicator presents the reported number of later-stage venture capital deals and the associated dollar value. Venture capitalists invest in firms that have a high potential for growth but are not ready to do an initial public offering of stock. The investments tend to be both high risk and high return. Capital investments may be monitored by stage of the development of the business enterprise: start-up (seed), early, expansion, and later. In the later stage of development, the company has a demonstrated track record with ongoing revenue generation and positive cash flow. Spin-outs of operating divisions of existing companies are included in this stage.
The data are inflation adjusted using the gross domestic product (GDP) implicit price deflator. The inflation-adjusted dollars are expressed in terms of the latest year of data available.
Rationale: Venture capital activity can be used to measure the number of potentially high-growth firms being started. These typically are innovative high-technology firms, such as biotechnology enterprises.
Data Sources: PricewaterhouseCoopers/National Venture Capital Association MoneyTree(tm) Report https://www.pwcmoneytree.com/MTPublic/ns/index.jsp. Click on ‘Historical Trend Data’ then specify the state and stage at the bottom. The GDP implicit price deflator is available from the U.S. Department of Commerce, Bureau of Economic Analysis http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=Y (Table 1.1.9).
Comments on the Quality of the Data: Nationally, the availability of venture capital is cyclical. Annual dollar values are volatile for Arizona. Wide swings in dollar value can result from a single large deal. The data are based on publicly reported deals and may not be representative of total venture capital invested.
