An Indexation of Startup Ecosystem Maturity and Sustainable Economic Growth

Startup ecosystems and venture capital (VC) are increasingly recognized as critical drivers of sustainable economic growth, yet their macroeconomic effects remain insufficiently quantified. This study develops and validates a composite VC activity index (V Index) as a proxy for startup ecosystem maturity across 23 European countries from 2013 to 2024. The V Index is derived via Principal Component Analysis applied to four VC metrics: VC investment amount, VC divestment amount, number of investment rounds, and number of divestment rounds. Using panel data regression methods—including fixed and random effects specifications, the study considers associations between the V Index and four macroeconomic outcomes: labor productivity, capital productivity, high-technology exports, and business R&D expenditure. The results show that a more mature startup ecosystem is associated with immediate gains in labor productivity, while capital productivity, high-technology exports, and innovation expenditure show positive associations with a one- to two-year lag, reflecting time-to-build and knowledge diffusion dynamics. These findings provide empirical support for VC-driven startup ecosystems as contributors to sustainable, knowledge-based economic growth and present actionable evidence for decision-makers designing startup support programs aligned with sustainable growth objectives.