fr tart ale examinin f ancin gh- growt tures · us canada eu late stage 0.132% 0.020% 0.012% early...
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ABSTRACT
We examine the challenge entrepreneurial companies face in going beyond the start-up phase and growing into large successful companies. We examine the long-term financing of these so-called scale-up companies, focusing on the United States, Europe and Canada. We first provide a conceptual framework for understanding the challenges of financing scale-ups. We then show some data about the various aspects of financing scale-ups in the US, Europe and Canada. Finally we raise the question of long-term public policies to support the creation of a better scale-up environment.
From start-up to scale-up: examining public policies for the financing of high-growth ventures
Gilles Duruflé (gilles.durufle@sympatico.ca) is President of the QCC Public Policy Forum
on Venture Capital and Innovation. Thomas Hellmann (Thomas.Hellmann@sbs.ox.ac.uk),
Saïd School of Business, University of Oxford. Karen Wilson (karen.wilson@bruegel.org) is a
Senior Fellow at Bruegel.
This paper is forthcoming in 2018 in Mayer, C., S. Micossi, M. Onado, M. Pagano and A. Polo
(eds) Finance and Investment: The European Case, Oxford University Press
This paper was developed through CEPR’s Restarting European Long-Term Investment
Finance (RELTIF) Programme, which is funded by Emittenti Titoli. Financial support was also
provided by CEPR, Assonime, the John Fell and Saïd Foundations.
The authors would like to thank roundtable participants at the 1st Oxford Entrepreneurship
Policy Roundtable (May 2015), Bruegel (September 2015), The Quebec City Conference Tech
Innovation Platform (March 2016), the Oxford roundtable for the Barclays scale-up report
(May 2016), and the RELTIF workshops in Milan (January 2016) and Capri (June 2016),
including our discussants José Liberti and Andrew Ellul, for their many helpful insights and
suggestions. Finally the authors sincerely and gratefully thank the research assistants David
Cartwright, Denis Frydrych, Carolyn Hicks, Kaushal Inna and Christian Rauch.
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GILLES DURUFLÉ, THOMAS HELLMANN AND KAREN WILSON
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US Canada EU
Late stage 0.132% 0.020% 0.012%
Early stage 0.062% 0.028% 0.011%
0.000%
0.050%
0.100%
0.150%
0.200%
0.250%
2007 2008 2009 2010 2011 2012 2013 2014
US 75% 74% 67% 67% 66% 66% 62% 67%
EU 63% 58% 52% 45% 45% 42% 46% 44%
Canada 41% 24% 27% 33% 40% 47% 53% 53%
0%10%20%30%40%50%60%70%80%
US EU Canada
1.9 8.9
19.6
28.1
36.7
48.9
1.4 8.6
16.1
25.3
29.9
35.2
1.1 7.1
13.4
20.922.8
0
10
20
30
40
50
60
Seed A B C D E
Avg
. In
ve
ste
d A
mo
un
t ($
M)
Funding Round
US EU Canada
2.1
2.5
3.1
3.7
4.24.4
1.6
2.2
2.8
3.43.6
3.9
1.4
2.12.4
2.83.1
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Seed A B C D E
Avg
. N
um
be
r o
f In
vesto
rs
Funding Round
US EU Canada
0.9
3.6
6.3
7.6
8.7
11.1
0.9
3.9
5.8
7.48
8.8
0.8
3.4
5.6
7.5 7.4
0
2
4
6
8
10
12
Seed A B C D E
Avg
. T
icket
Siz
e (
$M
)
Funding Round
US EU Canada
6
24
93
3 9
41
0
10
20
30
40
50
60
70
80
90
100
First Second LaterMe
dia
n p
re-m
on
ey v
alu
ati
on
by r
ou
nd
c
las
s (
$M
)Median pre-money valuation
by round class (in $M) in 2013
United States
Europe
99
17
2
44
US
EU
Canada
ROW
Smaller than $25M $25M-100$ $100M-$250M Larger than $250$
US 20% 27% 25% 28%
EU 22% 44% 24% 10%
Canada 12% 53% 24% 11%
0%
10%
20%
30%
40%
50%
60%
Pe
rce
nt
of
Fun
ds
59
.7
17
2.5
30
0 32
5 36
4
37
2
72
.1 13
1.6
15
3.9 18
7.8
19
1.7
21
4.1
65
.5 11
3.1 1
35
20
0
19
5.2
0
50
100
150
200
250
300
350
400
Seed A B C D E
Me
dia
n F
un
d S
ize
($
M)
Funding Round
US EU Canada
51.7%39.6%
17.4%11.5%
31.5%
33.2%
30.7%
26.4%
9.3%
13.9%
22.1%
26.1%
7.5%13.3%
29.8%36.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Smaller than $25M $25M-100$ $100M-$250M Larger than $250$
Seed Series A Series B Series C+
42%
33%
25%
57%
31%
12%
71%
23%
6%0%
10%
20%
30%
40%
50%
60%
70%
80%
1 Round 2 Rounds >2 Rounds
% o
f In
ve
stm
en
ts
US EU Canada
79100
264.2
64.9
94.5
195.7
88107.5
123
0
50
100
150
200
250
300
1 Round 2 Rounds >2 Rounds
Me
dia
n F
un
d S
ize
($
M)
US EU Canada
6690
150
200
281
40 50 54
10382
5265
109 116
154
0
50
100
150
200
250
300
I II III IV V
Me
dia
n F
un
d S
ize
($
M)
Raised Funds over Time
US EU Canada
2007 2008 2009 2010 2011 2012 2013 2014 2015
Other 21% 24% 15% 19% 12% 21% 20% 19% 27%
Private Individuals 15% 16% 14% 18% 14% 8% 17% 7% 7%
Pension funds 12% 5% 9% 10% 8% 5% 9% 14% 7%
Government 14% 15% 29% 32% 33% 38% 34% 35% 31%
Fund of funds 13% 10% 13% 4% 10% 9% 9% 9% 12%
Corporate 11% 20% 8% 14% 14% 15% 7% 13% 14%
Banks 14% 10% 13% 4% 9% 4% 3% 3% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
19.8%
6.7%
15.9%
00%
05%
10%
15%
20%
25%
US EU Canada
% of Companies with Venture Debt
1.2 7.8
19.5
25.830.2
56.1
1.1 7.115.2
20.5
27.2
43.2
0
10
20
30
40
50
60
Seed Series A Series B Series C Series D Series E
Ave
rag
e F
un
din
g V
olu
me
($
M)
With Debt Without Debt
119.1 8.9
1719.4
16.4
1.8 2.4 1.4 1.42.6 2.62.9
13.8
3.3
12.911.8
9.5
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015
US EU Canada
392
273
115
6692
38
265
208
109
27 31 26
Life Sciences Software Hardware
US Closed US Raised $100M+
Europe Closed Europe Raised $100M+
9.7%
5.4%
1.7%0.7%
3.7%2.5%
0.8% 0.4%
0%
2%
4%
6%
8%
10%
12%
Over $1B Over $2B Over $5B Over $10B
US Europe
6 33 52
78
141
210 214 214
367 331
128
80
-
50
100
150
200
250
300
350
400
Am
ou
nt
Ra
ise
d (
$M
)
© Bruegel 2017. All rights reserved. Short sections, not to exceed two paragraphs, may be quoted in the
original language without explicit permission provided that the source is acknowledged. Opinions expressed
in this publication are those of the author(s) alone.
Bruegel, Rue de la Charité 33, B-1210 Brussels
(+32) 2 227 4210
info@bruegel.org
www.bruegel.org
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