How Unique is VC’s American History?

26 Pages Posted: 3 Jun 2021

See all articles by Arthur G. Korteweg

Arthur G. Korteweg

University of Southern California - Marshall School of Business

Berk A. Sensoy

Vanderbilt University - Finance

Date Written: June 2, 2021

Abstract

VC: An American History offers a compelling chronicle of the development of professional venture capital (VC) in the United States, from VC-like forebearers as diverse as 18th century cotton manufacturing and 19th century whaling up to the state of the modern VC market at the turn of the millennium. The book emphasizes America’s enduring advantage in venture capital as a consequence of these early developments and as a practical governance solution for investing in the long-tailed returns of risky new ventures. In this essay we discuss similar historical precedent and governance arrangements in the spice trading voyages of the 16th and 17th century Dutch Republic, calling into question the uniqueness of the early American VC ancestors. Moreover, far from being a distinguishing feature of early ventures, long-tailed returns exist even in public equities, suggesting that the VC governance structure is about more than the distribution of returns. We conclude that the reasons for American dominance of contemporary VC remain unclear. Picking up where the book leaves off, we summarize facts and trends in 21st century venture capital.

Keywords: Venture capital, history, development, innovation

JEL Classification: G24, M13, N20, O16, O31

Suggested Citation

Korteweg, Arthur G. and Sensoy, Berk A., How Unique is VC’s American History? (June 2, 2021). Available at SSRN: https://ssrn.com/abstract=3858751 or http://dx.doi.org/10.2139/ssrn.3858751

Arthur G. Korteweg (Contact Author)

University of Southern California - Marshall School of Business ( email )

3670 Trousdale Parkway
Los Angeles, CA 90089
United States

HOME PAGE: http://www.marshall.usc.edu/personnel/arthur-korteweg

Berk A. Sensoy

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

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