Today we share an important pattern that highlights the growing significance of companies backed by venture capital in today’s world.
The chart depicts the number of VC-backed companies among the top 10 US companies by market capitalization, over time. It also shows the proportion of VC-backed companies when one measures by market cap, not simply by number of companies.
Back in 2010, only two of the top 10 companies were VC-backed when they started out: Microsoft and Apple. By the first quarter of 2023, the number of VC-backed companies in top 10 had increased to seven. Microsoft and Apple were joined by Google, Amazon, Nvidia, Tesla, and Meta. Long-established non-VC-backed corporate giants—Exxon Mobil, Walmart, General Electric, Procter & Gamble, Bank of America, and JPMorgan Chase —lost their places in top 10 (Visa, which is non-VC-backed, contrary, joined the top).
A very similar and even steeper dynamic can be seen when one measures by market cap share. In 2010, the share attributable to VC-backed companies hovered around 20%, but by the first quarter of 2023, it had surged past the 80% mark. Notably, all the top 5 companies by market capitalization as of today are VC-backed.
Prior to 2010, VC-backed companies never had so much significance. The trend of VC-backed companies carving out an increasingly significant presence in the US business world has unfolded over the last two dozen years.
This is only one of many powerful illustrations on the impact of venture capital in today’s world. We investigate the role of VC every day. We would love to know your opinion about this trend and, of course, any questions you may have. Please share your thoughts in the comments section!
Thank you to the Stanford University Graduate School of Business Venture Capital Initiative team for spearheading this research.
Note: The market capitalization data used for this analysis come from Compustat and CRSP, both provided by WRDS (Wharton Research Data Services). The values for each quarter are based on the last trading day.
