VC: An American History

by Tom Nicholas

Overview

A major exploration of venture financing, from its origins in the whaling industry to Silicon Valley, that shows how venture capital created an epicenter for the development of high-tech innovation.

VC tells the riveting story of how the industry arose from the United States’ long-running orientation toward entrepreneurship. Venture capital has been driven from the start by the pull of outsized returns through a skewed distribution of payoffs—a faith in low-probability but substantial financial rewards that rarely materialize. Whether the gamble is a whaling voyage setting sail from New Bedford or the newest startup in Silicon Valley, VC is not just a model of finance that has proven difficult to replicate in other countries. It is a state of mind exemplified by an appetite for risk-taking, a bold spirit of adventure, and an unbridled quest for improbable wealth through investment in innovation.

Tom Nicholas’s history of the venture capital industry offers readers a ride on the roller coaster of setbacks and success in America’s pursuit of financial gain.

Product Details

ISBN-13:	9780674988002
Publisher:	Harvard University Press
Publication date:	07/09/2019
Pages:	400
Product dimensions:	6.20(w) x 9.40(h) x 1.60(d)

About the Author

Tom Nicholas is William J. Abernathy Professor of Business Administration at Harvard Business School. He holds a doctorate from Oxford University. Prior to joining HBS, he taught at the MIT Sloan School of Management and the London School of Economics. At HBS he teaches a second-year elective course on American business and economic history, which examines entrepreneurship, innovation, and business development in the United States over the past 240 years. He has received the Faculty Teaching Award multiple times and the Charles M. Williams Award for Excellence in Teaching.

Table of Contents

Introduction: The Significance of History 1

1 Whaling Ventures 11

2 The Early Development of Risk Capital 40

3 The Rise of Private Capital Entities 78

4 The Market versus the Government 107

5 The Limited Partnership Structure 144

6 Silicon Valley and the Emergence of Investment Styles 183

7 High-Tech, an Evolving Ecosystem, and Diversity during the 1980s 233

8 The Big Bubble 268

Epilogue: From the Past to the Present and the Future 304

Notes 321

Acknowledgments 357

Index 361

Editorial Reviews

A detailed, fact-filled account of America’s most celebrated moneymen…It provides a valuable look into their world…Nicholas is at his best when he is charting just how reliant venture capital has been on the government—and just how far the industry has gone to try and shape government policy in its favor.

New Republic - Avi Asher-Schapiro

VC is a captivating book that casts a historical light on the contemporary landscape of venture capital. Nicholas brilliantly explains the surprising origins of the financial practices and organizational structures of the VC industry we know today.

Toby E. Stuart

A penetrating history of the industry…I enthusiastically recommend it.

Advisor Perspectives - Laurence B. Siegel

[An] incisive history of the venture-capital industry.

New Yorker

An excellent and original economic history of venture capital.

Marginal Revolution - Tyler Cowen

Ralph Waldo Emerson once called America ‘the country of tomorrow,’ and Nicholas’s book does a great job of showing how venture capital, a rocket fuel for entrepreneurial risk, played a fundamental and unique role in proving Emerson right.

Mike Maples

Not only an insightful study of an asset class but a fascinating history which touches on fundamental questions of political economy. VC is distinctive mainly because it offers such a long view of venture capital’s evolution…[It] offers many lessons for attentive readers, explaining not only the present features of the venture landscape but also how we might address some of the widely recognized problems facing the U.S. economy today.

Julius Kreinn Conservative

In his extremely interesting, readable, and informative VC, Tom Nicholas tells you most everything you ever wanted to know about the history of venture capital, from the financing of the whaling industry to the present multibillion-dollar venture funds.

Arthur Rock

Though it’s no secret that Pentagon money helped Silicon Valley to develop into a technology hub, Nicholas’s history sheds light on the less explored role of venture capital firms in bringing these new technologies to civilian markets.

Bookforum - Jamie Martin

Whatever your view of venture capitalists, it’s worth studying where they came from. I had a vague familiarity with the role of U.S. postwar policy in the creation of the species, but I learned a lot more from Nicholas. And I’d never thought about their precursors in the old whaling industry!

Bloomberg Opinion - Stephen L. Carter

[An] incisive history of the venture-capital industry.

New Yorker

A thorough history of the venture capital industry, Nicholas’s book is fascinating in its details—such as the analogy between the nineteenth-century whaling industry term carry, for carrying chunks of caught whales, and today’s carried interest—and illuminating in its depiction of VC as a major driver of innovation around the world.

Scott Kupor

Not only an insightful study of an asset class but a fascinating history which touches on fundamental questions of political economy. VC is distinctive mainly because it offers such a long view of venture capital’s evolution…[It] offers many lessons for attentive readers, explaining not only the present features of the venture landscape but also how we might address some of the widely recognized problems facing the U.S. economy today.

American Conservative - Julius Krein