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.
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