Question

What is 'venture capital'? What role do you think venture capital has in economic development

Answer 1

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Answer 2

Start up companies with a potential to grow need a certain amount of investment. Wealthy investors like to invest their capital in such businesses with a long-term growth perspective. This capital is known as venture capital and the investors are called venture capitalists.

Previously, there has been little empirical evidence about the role of venture capital in fostering technological innovation. Recent research, sponsored by the National Science Foundation and Babson College and completed with our colleagues Stanley E. Pratt and Norman Fast (Venture Economicsand Venture Capital Journal) shed some new light on the flow of venture capital to highly innovative technological ventures from 1967–1982. The evidence suggests that venture capital not only plays a significant role, but that it is a unique kind of investing in terms of when, where, and how it is done. Ironically, this research indicates that the “capital” in venture capital is the least important ingredient in fostering technological innovation.