This new index reveals the top countries for VCs to invest; seven of top 10 are from Europe

The USA’s long-held supremacy over venture capital and startup activity is now sorely tested by the rapid ascent of the European startup ecosystem. For decades – as late as the mid-1990s – venture capital was almost an exclusively American phenomenon, thanks to Silicon Valley. However, things have started changing as VC’s slowly begin to venture outside the US. 

Sweden tops the list

In the last few years, we have seen tremendous growth in startups and VC activities globally, especially in Europe and Asia. Notably, the geography of both startup activity and venture capital investment is undergoing a profound period of globalisation. 

Recently, the release of the Global VC Investment Index has revealed the best countries in the world for venture capitalists to invest in. Out of the top 10 cities, seven are from Europe, with Sweden leading the pack. 

The top 10 cities are:

• Sweden (GVCII score- 33)
• Singapore (GVCII score- 32)
• Switzerland (GVCII score- 32)
• Finland (GVCII score- 32)
• Denmark (GVCII score- 32)
• Germany (GVCII score- 31)
• Australia (GVCII score- 31)
• Netherlands (GVCII score- 31)
• Japan (GVCII score- 31)
• Norway (GVCII score- 31)

As per the report, the Scandinavian country scored high across all factors examined, gaining a total index score of 33 out of a possible 35. This means Sweden is a location venture capitalists should be keeping a keen eye on for investment-worthy businesses.

5 countries with GVCII score of 32, but why Singapore? 

Furthermore, the report adds that Sweden’s economic growth forecast for 2020 was at a negative, a small decline compared to other European countries. Following Sweden, Singapore sits in second place with a GVCII score of 32. However, it shares the same GVCII score with other countries including Switzerland, Finland, and Denmark. Having said that, the higher number of successful startups already hailing from Singapore is what allowed it to clinch the second place spot, ahead of the other three countries.

The report adds, “The Asian country ranked higher than Sweden for the number of top startups, investment environment, and economic growth. However, it fell slightly below the top spot based on the skill of population, entrepreneurial spirit, tech readiness, and economic, political, and social stability. While it ranked lower than Sweden for these elements it was still one of the top-scoring countries across the board which is what earned this thriving island country second place.” 

The Netherlands ranks 8th

The Netherlands ranks 8th with a GVCII score of 32. The land of Tulips scored the second rank in terms of Entrepreneurial Spirit and third in Stability.  At the same time, Switzerland ranked as the country with the most skilled population, while Finland came top for stability.  

How do they do it?

According to KO2, the report is based on several crucial factors such as the number of startups, the skill of population, entrepreneurial spirit, technological readiness, economic growth, economic and social stability, and investment environment.

“Using the raw data from the above sources, we then scored each country out of five for each of the seven metrics. We then totalled the score across the seven metrics together to get the final GVCII score for each country. We ranked the countries by this final score. Where there was a draw in the total score we used the number of startups as the ranking factor.”

Main image credits: koya979/Shutterstock