VC-Backed Companies Account for Over 90% of U.S. Public Company R&D Spending, Highlighting Outsized Economic Influence

Recent commentary from venture capitalist Ivan Landabaso has underscored the profound and disproportionate economic impact of venture capital-backed companies on the U.S. economy. Landabaso, a Partner at JME Ventures, highlighted key statistics on social media, emphasizing the critical role these firms play in innovation, market capitalization, and job creation.

Venture-backed companies, despite representing a small fraction of overall businesses, are responsible for a dominant share of research and development (R&D) expenditures among U.S. public companies. According to research by Gornall and Strebulaev, cited in a 2023 LSE Economic History paper, VC-backed companies founded after 1968 and going public after 1978 account for approximately 92% of all R&D spending among their public counterparts. This figure far surpasses the broader business sector's contribution, which, while significant, performed an estimated 78% of all U.S. R&D in 2022, according to the National Science Foundation.

Beyond R&D, these firms command a substantial portion of the public market. Studies from Stanford Graduate School of Business indicate that VC-backed companies founded between 1979 and 2013 comprise 57% of the market capitalization of "new" public companies. Other analyses, such as that by Gornall and Strebulaev, place this figure even higher, at around 75% of total U.S. market capitalization for VC-backed public entities.

In terms of market entry, venture capital plays a pivotal role in bringing companies to public markets. Between 1979 and 2013, VC-backed companies accounted for 28% of all U.S. Initial Public Offerings (IPOs), demonstrating their significant pathway to public ownership and growth.

The impact extends powerfully to job creation. While Ivan Landabaso's tweet noted that "startups (many vc backed) account for almost all 25M jobs created since 1977," more recent academic work provides granular detail. A 2024 paper by Yoshiki Ando revealed that VC-backed firms contributed 10.6% of net employment growth and 15.8% of net payroll growth in the U.S. between 1990 and 2019. Further emphasizing their direct contribution, a 2025 discussion paper from the Tinbergen Institute estimated that each million dollars invested by venture capital yields approximately 41 jobs.

These statistics collectively underscore the unique and outsized influence of venture capital in fostering high-growth, innovative enterprises that drive significant economic value and job creation in the United States.