Effects of Venture Capital and Private Equity Funds in Austria (EcoAustria)

Summary

• In Vienna, 44 financing rounds were completed in 2021 (as of July 22), with investment volume increasing from €121 million in the previous year to €464 million.p.3
• A short-term scenario increasing available PE capital by nearly €500 million to the EU average would direct around €270 million into domestic Austrian companies.p.3
• The short-term expansion of PE capital is projected to generate an annual value-added effect of around €1 billion based on expected 2022 GDP.p.3
• Global assets under management in the buyout segment currently reach $1.645 trillion.p.8

Key insights

1. Venture capital helps startups bridge the technological valley of death between prototype development and successful market entry.p.3
2. The expansion of venture capital hubs creates indirect employment in specialized services including legal counsel, tax advisory, and fund administration.p.3
3. Academic literature indicates that private equity returns generally outperformance public equity benchmarks by 4 to 6 percentage points.p.10
4. German VC-backed companies file ten times more patents than non-VC-backed companies, demonstrating a strong link to innovation.p.11
5. Under a short-term model simulation, raising Austrian PE capital increases real overall investments by nearly 0.4%.p.3
6. In the long-term scenario, an expansion of Austrian PE capital improves the public primary fiscal balance by slightly more than €1 billion.p.20
7. A 10 percentage point increase in the tax rate on employee stock options correlates with a reduction in VC activity of roughly 0.01% of GDP.p.23