16 definitions on the economics of VC by Scott Kupor

TL;DR - Early instances of deploying risk capital and VC-like activity occurred prior to 1900.

Helpfulness - 5

Tags - risk capital, venture capital, LP, Glass-Steagall Act

Questions answered:

  • What were early instances of risk capital?

Summary:

  • Some consider Queen Isabella of Spain to be the first major deployer of risk capital (VC) when she backed Christopher Colombus.
  • The whaling industry (~1840s) can be likened to VC with agents (similar to VCs), expeditions (similar to startups), wealth investors (similar to LPs), ship captains (entrepreneurs), and a high-risk high-reward environment (30% of voyages lost money).
  • J.P. Morgan acted as a VC when he financed Thomas Edison’s General Electric Company (1878).
  • Banks played a large role in funding startups until Glass-Steagall Act (1933).

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