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Determinants of Venture Investment in Emerging Markets

Author

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  • Adam Welker
  • Helper Zhou

Abstract

This study examines the rapid growth of venture capital (VC) investment in emerging markets and its determinants. During the 2010 to 2020 period, we find that the level of VC in emerging markets grew at a compound annual growth rate of 35.2%, and the global share of VC generated in emerging markets rose from 11.8% in 2010 to 31.5% by 2020. Using a sample of 135 emerging market economies, we find that market size and human capital development are the most significant factors related to growth in VC investment in these markets. The ease of doing business and the depth of financial markets also influence VC activity, but to a lesser extent. Overall, our results indicate that the presence of large markets and capable entrepreneurs can help offset institutional challenges inherent in these markets. JEL Codes: F63, G15, G24, O43

Suggested Citation

  • Adam Welker & Helper Zhou, 2025. "Determinants of Venture Investment in Emerging Markets," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 24(2), pages 170-193, June.
    • Handle: RePEc:sae:emffin:v:24:y:2025:i:2:p:170-193
    DOI: 10.1177/09726527241301197
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    More about this item

    Keywords

    Venture capital; emerging markets; economic development; innovation; international finance; entrepreneurship;
    All these keywords.

    JEL classification:

    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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