Financial Post | Opinion

A better model for venture capital

In 1991, Israel had almost nothing in the way of venture capital. Today, it has a host of local VC funds that together invest nearly twice as much per capita as those in the United States.

That blooming of investment in the desert has undoubtedly benefited the Israeli people. In recently published research comparing regions across the United States, Sampsa Samila and I have estimated that, on average, each company funded by venture capital led to the creation of an additional two to six startups and more than 300 local jobs — good jobs at that, with nearly six-figure salaries.

That may seem surprising. After all, each investment only funds one company and usually amounts to no more than a few million dollars. But venture capital can generate a number of “multiplier” effects: The startups that they fund need suppliers. The ideas and…

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