The Geoeconomics of Venture Capital An Economic Complexity Approach to Emerging Technological Sovereignty

TL;DR

This paper introduces a quantitative method using economic complexity metrics to analyze countries' emerging technological sovereignty based on venture capital data and domain specialization.

Contribution

It develops new indices like GCI and ETGCI to rank countries and domains by venture specialization, providing insights into technological sovereignty and relatedness-based technological development.

Findings

Cloud Computing, Cybersecurity Tools, and Medtech have high ETGCI values.

The US and Israel lead in venture diversity and specialization.

Country and domain rankings remain stable from 2021-2024.

Abstract

We explore a quantitative approach to emerging technological sovereignty and geoeconomic power by assessing the relative positioning of countries with economic complexity methods applied to the structure of national venture-capital (VC) portfolios and their associated Revealed Venture Advantage (RVA) metrics. Using Crunchbase firm- and deal-level data, we map venture-backed startups to 18 emerging technology domains via a probabilistic multi-label large-language-model classifier, and construct an RVA-based country-technology specialization matrix for the 17 countries with the highest aggregate VC funding. From this matrix, we derive two eigenvector-based measures: a Geoeconomic Complexity Index (GCI) that ranks countries by the composition of their venture specializations, and an Emerging Technology Geoeconomic Complexity Index (ETGCI) that ranks domains by the extent to which specialization is concentrated among high-GCI countries. Empirically, Cloud Computing, Cybersecurity Tools, and Medtech exhibit the highest ETGCI values, reflecting concentration of specialization in a small set of leading countries. The United States and Israel consistently occupy a marked "high-diversity/low-ubiquity" position and lead the GCI ranking, followed by China, France, Japan, and Germany; both country and domain rankings are stable from 2021-2024. Finally, relatedness-based simulations identify, when it exists, for each country the Simplest Single Sovereignty Enhancing Technology (SSSET), i.e., the most feasible single new technological direction associated with the largest expected improvement in relative geoeconomic positioning.