History Of The Venture Capital Industry

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1.2. History of the venture capital industry Historically venture capital represented a small portion of alternative assets, which in turn represented a small, but sizeable, portion of the global financial asset base. (INSERT CITATION). Prior to the semiconductor boom in the 1960s, venture capital was closer to what today is described as angel investing. During this period, the majority of new venture financing originated from individual investors, and often financed by the entrepreneur or his or her family and acquaintances. (INSERT CITATION). Prior to the Second World War, most new venture financing was sourced from wealthy individuals and families. (CITATION) George Doriot is often regarded as father of the modern, whereby he established the investment firm ARD in 1947 to source institutional funds to be invested in financing new ventures. (CITATION) A decade later the U.S. government passed the Small Business Act of 1958, through which the government provide financing in form of debentures to Small Business Investment Companies (SBICs). While SBICs backed some of today’s most well-known multi-national corporation such as Xerox or FedEx, and share many aspects of the modern VC firm, they did not become the accepted model for venture financing. (Venture Capital and Finance of Innovation, Metrick et al) Perhaps the most valuable outcome of SBICs for the establishment of the venture capital industry was that it trained the professionals who later established the venture
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