A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006.

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Entry from October 03, 2011
Venture Capital (Venture Capitalist; Venture Capitalism)

"Venture capital” is risk capital—money invested in startup companies with high growth potential. The term “venture capital” was used by at least 1935 and was popularized in January 1938 as business leaders offered solutions to Congress to end the Great Depression.

The term “venture capitalist” has been cited in print since at least 1941 and “venture capitalism” since at least 1944.

Wikipedia: Venture capital
Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc. The typical venture capital investment occurs after the seed funding round as growth funding round (also referred as Series A round) in the interest of generating a return through an eventual realization event, such as an IPO or trade sale of the company. Venture capital is a subset of private equity. Therefore all venture capital is private equity, but not all private equity is venture capital.

In addition to angel investing and other seed funding options, venture capital is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company’s ownership (and consequently value).

Venture capital is also associated with job creation (accounting for 21% of US GDP), the knowledge economy, and used as a proxy measure of innovation within an economic sector or geography.

The Free Dictionary
venture capital
Money made available for investment in innovative enterprises or research, especially in high technology, in which both the risk of loss and the potential for profit may be considerable. Also called risk capital.

What Does Venture Capital Mean?
Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.

Free Merriam-Webster Dictionary
venture capital noun
: capital (as retained corporate earnings or individual savings) invested or available for investment in the ownership element of new or fresh enterprise —called also risk capital
venture capitalism noun
venture capitalist noun
First Known Use of VENTURE CAPITAL

(Oxford English Dictionary)
venture capital n. = risk capital n. at risk n. Compounds 2.
1943 M. A. Shattuck in Addresses at Membership Forum (Nat. Assoc. Investment Companies) 22 Industry during the last decade has not only lacked venture capital for new enterprises; it has also lacked venture capital for established concerns.
1971 Financial Mail (Johannesburg) 26 Feb. 681/1 These are some of the‥successes which have brought just about every major US institution into the venture capital arena.
1981 Sci. Digest Aug. 118/1 Venture capital, the money that bankrolls people with an innovative product, dried up in 1969.

venture capitalist n.
1971 Financial Mail (Johannesburg) 26 Feb. 681/2 Some venture capitalists insist on a majority equity stake.

26 February 1935, New Orleans (LA) Times-Picayune, “Position of U. S. Investor Strong, Says R. T. Crane,” pg. 11, col. 5:
The public must realize, he said, that “there must be both venture capital and investment capital, a balance between constructive speculation and conservative investment.”
(Ralph T. Cane, president of the Investment Bankers’ Association of America—ed.)

11 January 1938, New York (NY) Times, “Du Pont Planning $38,000,000 Outlay” by Louis Stark, pg. 12:
Under questioning of Senator Murray the witness (Lammot du Pont—ed.) said that revival of business would come if those who supply what he called “venture capital” would be willing to risk it.

23 January 1938, New York (NY) Times, “Recession and ‘Cures’ Described at Hearings” by Louis Stark, pg. 64:
The chie “cure” suggested by the business group was the stimulation of the capital-goods market and the encouragement of private “venture capital” to go into long-range industrial programs by the cessation of those policies of the government which “scared” private capital.

29 November 1941, New York (NY) Tmes, “Corporation Equities Fading,” Letters to the Times, pg. 16:
The consumer through lower rates, the government through higher rates, and labor through advances in wage rates have been advantaged by the superiority of their claims at the expense and near-extinction of the venture-capitalist.
New York, Nov. 27, 1941.

30 January 1944, Rockford (IL) Morning Star, “Is this Utopia?”, pg. 6, col. 2:
One thing seems to be evident—that in spite of the dearth of venture capital from private sources, there appears to be no famine of venture capitalism on the part of small communities.

21 October 1952, New York (NY) Times, pg. 22 ad:
Call these people share owners, stockholders, “venture capitalists” or whatever you want. They’re Americans the Pilgrims would recognize.
(The Exchange Magazine—ed.)

17 June 1962, New York (NY) Times, “Much Maligned Skyscrapers Appear to Have Bright Future” by Glenn Fowler, pg. 12, col. 1:
He was, with perhaps the exception of grain merchants, the last of the venture capitalists in a society of growing corporate bigness.

28 December 1966, New York (NY) Times, “Two New Bidder sEntering the Ranks of Douglas Suitors” by Robert A.Wright, pg. 61, col. 4:
Mr. Rockefeller, a venture capitalist with a long interest in aviation, said through a spokesman that, although he or his associates had made no offer of assistance, he stood by to consider any worthwhile plan that might be worked out.

Posted by Barry Popik
New York CityBanking/Finance/Insurance • (0) Comments • Monday, October 03, 2011 • Permalink