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1.1 Country Selection

Country selection for privateMetrics indices aims to balance data quality considerations and investability in private markets through the most common investment vehicles for accessing private companies including private equity and venture capital funds. For example, if a foreign investor finds it very complex to invest in a country with a high degree of protectionism and severe restrictions on Foreign Direct Investments, then such a country is less attractive to private equity capital, and thus is less likely to be representative of the broad performance of private markets.

To screen out countries by their attractiveness to private equity and venture capital investments, we begin with a ranking of countries in their attractiveness to private investors. The rankings compiled by researchers (Groh et al., 2023) at IESE Business School and updated every few years are used as a starting point. The rankings are compiled based on factors including economic activity, capital markets, taxation, investor protection, corporate governance, and labour environment that affect the relative risk/return attractiveness for PE/VC investors. 52 countries rank with an index score of 50 or above according to the tenth edition of the rankings, which are reproduced below.

Table: Highly Ranked Countries According to the PE/VC Attractiveness Index

Rank

Country

Rank

Country

Rank

Country

1

United States

19

Belgium

37

Turkey

2

United Kingdom

20

Malaysia

38

Mexico

3

Japan

21

Spain

39

Brazil

4

Canada

22

Italy

40

Philippines

5

Germany

23

Taiwan

41

Lithuania

6

South Korea

24

Ireland

42

Greece

7

Singapore

25

Thailand

43

Latvia

8

China

26

Saudi Arabia

44

Egypt

9

Australia

27

Poland

45

Hungary

10

France

28

Sweden

46

Bulgaria

11

Netherlands

29

New Zealand

47

Pakistan

12

Norway

30

Czech Republic

48

Chile

13

Denmark

31

Austria

49

Cyprus

14

Switzerland

32

Estonia

50

Morocco

15

Hong Kong

33

United Arab Emirates

51

Luxembourg

16

Finland

34

Portugal

52

Slovenia

17

Israel

35

Indonesia

18

India

36

Romania

Since private2000 and private3000 are designed to comprise 2,000 and 3,000 companies, respectively, the choice of the number of countries and their economic weights (weights discussed in 1.2 Country Weights) can lead to situations where a country with fractional weights below 1 does not become eligible for a single company to be included. In such cases, we do not select any company from the country. These weights are expected to be revised as new annual GDP data becomes available for the countries, giving a fair chance for growing economies to be part of the index. Likewise, the Groh et al. (2023) rankings are all expected to be revised biennially, and we expect to expand the countries covered (not drop any from the current list of 52) when such events happen.

Note that both changes to countries covered and weights will be reflected in the annual reconstitution in June and will not affect past data. More on index maintenance, including the annual reconstitution, is provided in 1.5 Index maintenance.


Groh, A., Liechtenstein, H., Lieser, K., & Biesinger, M. (2023). The Venture Capital & Private Equity Country Attractiveness Index. IESE Business School University of Navarra. https://blog.iese.edu/vcpeindex/

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