The Coronavirus Economic Crisis: Its Impact on Venture Capital and High Growth Enterprises

This paper has been prepared as a contribution to a larger on-going research activity on high growth innovative enterprises (HGEs) and scale up companies of the European Commission's Joint Research Centre (JRC), led by the Unit for Finance, Innovation and Growth (B7). This broad activity has been analysing the sectoral and geographical variability of HGE demographics in the EU and the framework conditions affecting their development with an emphasis on financing and risk-financing in particular. In keeping with the JRC's role of providing evidence and analysis to underpin EU policy, the work is conducted in close contact with a wide range of Commission policy DGs, and is designed to provide both EU-wide and member state specific input to the annual cycle of economic policy coordination in the EU known as the "European Semester". In the context of the COVID-19 crisis and the policy response to the immediate and subsequent socio-economic fallout, the vulnerability of high-growth and potential high-growth enterprises is of huge concern particularly in view of the disproportionate contribution these enterprises can play in securing a sustainable exit from the crisis in the medium to long term. The importance of risk-capital for these firms means that it is vital to have a close-to-real-time means of monitoring the impacts of the crisis on venture capital markets in Europe and globally so that pertinent evidence can be provided also in close-to-real-time to those developing and implementing the policy response to the crisis. This paper represents a particularly timely contribution in this regard.