Assessing Country Attractiveness in the Venture Capital and Private Equity Landscape in Emerging Markets

Abstract

In our research project “The Global Venture Capital and Private Equity Country Attractiveness Index” we tackle the question where institutional investors should best allocate their venture capital (VC) and private equity (PE) exposure. In this project, we have calculated an index in its third edition in 2012 which benchmarks 116 (thereof 83 emerging) countries across the world with respect to their attractiveness for international VC and PE investment. In this book chapter, we comment on this index with respect to emerging market VC and PE. The emerging market attractiveness ranking is led by China, followed by Malaysia, South Africa, Chile, Saudi Arabia, Poland, and India. Despite this overall ranking, we also discuss the success factors of the countries that remarkably improved their investment conditions over the last five years, namely Tunisia, Morocco, Saudi Arabia, and Egypt. We detect, that all Northern African, and almost all Middle Eastern countries covered by our index strongly increased their attractiveness for investors. Our index can help to support investors’ allocation decisions on the enlarging map of potential target countries. However, several emerging markets are probably not yet sufficiently mature for VC/PE investments and too early entry might not be a beneficial allocation strategy.

Keywords: emerging markets, venture capital, private equity

JEL Classification: F21, G23, G24, O16, O57