This week I read an interesting article (link here) from the FOMIN blog by Yuri Soares, Susana Garcia-Robles and Sandro Diez Amigo that explains academic evidence that “venture capital investments can be very effective in fostering economic development, producing both direct and indirect impacts”.
A few figures from these studies caught my attention:
- Each dollar invested in venture capital can generate up to $6.45 in economic activity through wages, payment to providers and taxes
- Small businesses create 66% of jobs worldwide
- Innovation drives 85% of economic growth
Despite these strong positive impacts of innovative small companies, they face a $2.1 Trillion dollars financing gap worldwide. That is $2,100,000 million dollars!
Being active investing in this type of companies in Latam, we know the huge deficit of capital that these companies and entrepreneurs face. We need more investors believing in the venture capital asset class that can provide the capital for VC funds. The capital the venture capital industry has today to invest in Latin America is very small compared to the opportunities we see.