This chapter reviews the existing literature on the impact of venture capital (VC) investments on economic growth, with a primary focus on firm-level effects. The analysis centers on insights gained during the 1990s and explores North American and European venture capital practices, shedding light on how VC-backed firms contribute to innovation, job creation, and market expansion. The review specifically examines the role of formal venture capitalists (VCs) in fostering firm growth, explicitly excluding informal private investors (PIs), such as angel investors and family offices.,A key distinction in the literature is the comparative emphasis on early-stage, high-tech VC investments in the United States versus a more diversified, industry-spanning VC landscape in Europe. While the US venture capital market includes investments across multiple stages and sectors, much of the research has prioritized early-stage funding and high-growth technology sectors, reflecting the model described by Bygrave and Timmons as “Classic” Venture Capital. This model focuses on high-risk, high-reward investments in nascent industries, where venture capital plays a pivotal role in financing innovation and accelerating firm expansion.,Through a review of empirical studies, this chapter evaluates how VC funding influences firm performance, scalability, and competitive positioning. Key areas of interest include the extent to which VC-backed firms outperform non-VC-funded firms in terms of revenue growth, employment generation, and market penetration. Additionally, we explore regional differences in VC market structures, investment strategies, and regulatory environments that shape the economic impact of venture capital in North America and Europe.,By synthesizing findings from the 1990s onward, this chapter aims to provide a comprehensive understanding of the role of venture capital in driving firm-level economic growth, highlighting the unique dynamics of the US and European VC ecosystems and the long-term implications of venture-backed entrepreneurship on broader economic development.,

This journal reviews the literature on the impact of venture capital (VC) investments on economic growth, with a particular focus on firm-level effects. It examines how VC-backed firms contribute to innovation, job creation, and market expansion, providing insights into the mechanisms through which venture capital fuels entrepreneurial success and economic development. The review draws from empirical studies and theoretical frameworks, analyzing key findings from North America and Europe, where venture capital markets have evolved with distinct characteristics and investment patterns.,A central theme of the literature is the role of formal venture capitalists (VCs) in fostering firm growth, differentiating them from informal private investors (PIs), such as angel investors and family offices. The journal explores how VC involvement impacts firm performance, including revenue growth, scalability, competitive positioning, and long-term sustainability. It also highlights sectoral differences, particularly the dominance of early-stage and high-tech investments in the U.S. market, which aligns with Bygrave and Timmons’ concept of "Classic" Venture Capital, compared to a more diversified investment landscape in Europe.,Furthermore, this review investigates how venture capital financing influences firm innovation, productivity, and exit opportunities, assessing whether VC-backed firms achieve higher success rates, greater technological advancements, and stronger market penetration compared to non-VC-funded counterparts. Additionally, it considers the broader economic implications of venture capital, such as its role in regional economic development, industry transformation, and the commercialization of groundbreaking technologies.,By synthesizing key academic contributions, this journal provides a comprehensive understanding of venture capital’s role in firm-level economic growth, offering valuable insights for investors, policymakers, and entrepreneurs. The findings underscore the importance of VC investment strategies, regulatory environments, and market conditions in shaping the long-term success of venture-backed firms and their contribution to economic progress.,