Venture Capitalists and the Economy

On February 16, 2013 by Alexander

Generally, venture capitalists have done a good job of creating a positive perception of their industry and their role in the economy. Here’s the most common talking points that support venture capital:

  1. Job creation. Venture capitalists invest in small companies and help them get big. When they’re big, they employ lots of people. Therefore venture capital supports job creation. Here’s a report that discusses that, financed by the National Venture Capital Association, an industry lobby:
  2. Technology progress. New products, new industries. Those come from small companies working hard to bring their vision to the rest of the world. Venture investors help those companies grow. PCs, Software, the Internet. If you like progress, thank a venture capitalist.
  3. Historical examples. Venture capitalists invested in Microsoft, Amazon, Google, Apple, Oracle and lots of other big companies you’ve heard of. If you like those companies, you should like the investors that supported them.
  4. American competitiveness. Our technology industry, backed by venture capital firms, is critical to keeping American industry innovating and competitive on a global scale.
  5. Cleaner, greener companies. Technology companies pollute less than industrial companies. If you care about the environment, you should support a move toward clean and green technology companies. More relevant now that venture capital has begun investing heavily in “cleantech” such as solar panels, electric cars and biofuels.
  6. Entrepreneurship as the American Dream. Venture capital helps innovative people recognize their full potential, run their own companies and achieve great things. It’s a storyline that resonates with Americans.

Those are the talking points. Some are more salient than others. Some are a stretch. I don’t agree with all of them. Many of the most successful entrepreneurs created great companies without the benefit of venture capital. Please take these talking points with a big grain of salt and come to your own conclusions about the industry.

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