Talk:Venture capital/Archives/2013

Venture capital
The definition on venture capital is incorrect according to related literature. Business sciences (McGraw, 1996) define it totally different. You need to verify your sources and citations based on applied business sciences. I am sure that you don't invest in any risk situation. This is one of the main reasons that start-ups don't receive venture capital. My experience with 48 high-tech start-ups as well the results of 10 years of applied business research "Research to Industrialisation" proof the statement as incorrect. I would prefer the definition as stated in the literature which is: Venture capital is no risk capital; it is a pool of equity capital that is professionally managed (McGraw and Hill; 1996). Venture Capital is rated as part of the formal capital market and not part of the informal risk capital market!


 * I haven't looked at the history, but the definition appears to still need revision. The article has other areas for improvement, including "ARDC is credited with the first trick..." - is "trick" a financial/investment term? The closest thing on wikipedia would be the lay interpretation which effectively leads to further suspicion regarding the overall quality of the entry. Soupman4 (talk) 21:31, 11 December 2013 (UTC)

—Preceding unsigned comment added by 92.228.84.149 (talk) 10:08, 8 March 2008 (UTC)

I don't think the line "mostly in the US" is really well put. While it's true the the US certainly has the lions share of both venture backed startups and VC investment, I think "most" gives the wrong slant to it. Perhaps something more factual? "With the US receiving, on average x per cent of global VC investment".

The "international section" needs some work. I would like see the inclusion of a table showing the geographic spread of VC dollars for the most recent year available. Ideally this should be broken down by U.S. states, and then by international country, to show how much money goes to Silicon Valley companies (ie. California) and how much goes to NY and MA companies. Another idea would be to show breakdowns percentage by industry (tech, pharma, internet, communications etc.) There is mention in the article of the VC success "biggies" such as Amazon etc. Maybe a ranking chart of the best return VC investments. This would really help clarify for readers the whole concept of VC investment if there was a chart that showed: Name of VC, Company, Investment amount, Exit Amount. Percentage ROI.

I made the 8/7/2003 changes to the this page. I am an attorney with Wilson Sonsini Goodrich & Rosait, specializing in the representation of VC funds. Please direct comments to bmcdaniel (at) public (dot) myfastmail (dot) com


 * Nice work. Thanks.  Could you review recent changes too?  An issue with this article is that it is a bit too focused on the US/Silicon_Valley view.

Ann Winblad is probably the most quotable venture capitalist. This article could use some spicing up. Two things she's notably said is that a new idea is in the market 120 days after it is presented to any VC, period, no matter what kind of trust or legal documents exist. Many VCs just don't sign NDAs to avoid entanglements in ventures they aren't likely to invest in, all things considers (the 1/400 number comes from some studies of Silicon Valley VCs and that was actually during the boom). Another interesting thing that she says is that that it always takes at least five years to fully bake a company, no matter how much one tries to rush the process. By these standards most dotcom IPOs were - half-baked!

Some links to Red Herring and Industry Standard magazine would not be out of line, nor would a more technical statement of where the lines are drawn between venture capital and an investment bank.

The History section is correct in describing how the Glass-Stegall act separated the capital-investment and services functions of investment banks. Implicit seems to be the idea that, in the United States, venture capital serves the capital-investment role that is served by Investment banks in other countries. Although I'm only barely qualified to have an opinion, I'm not sure I would agree with this. It seems to me that companies that are sufficiently large to attract investment banking capital overseas would turn to the public markets in the United States. The public equity markets in the United States are famously deeper, more liquid and open to younger enterprises than foreign markets. Classic venture capital, at least in its pre-bubble manifestation, is really too small to attract the attention of investment banks, either in the United States or overseas. I think that venture capital, as a professional activity, is really confined largely to the United States. Overseas, capital formation on this small scale tends to be done by family, conglomerates or other non-specialized sources.