The nature and role of venture capital

Abstract

Venture capital has become an important engine of economic growth in the United States over the last decades. For instance, Gompers and Lerner (2001a: 83) state: “No matter how we look at the numbers, venture capital activity clearly serves as an important source for economic development, wealth and job creation, and innovation.” Gilson (2002: 2) likewise asserts:

“The venture capital market and firms whose creation and early stages were financed by venture capital are among the crown jewels of the American economy. Beyond representing an important engine of macroeconomic growth and job creation, these firms have been a major force in commercializing cutting edge science, whether through their impact on existing industries as with the radical changes in Pharmaceuticals catalyzed by venture-backed firms’ commercialization of biotechnology, or by their role in developing entirely new industries as with the emergence of the internet and world wide web.”