Venture Capital in Silicon Valley and Beyond

Project Expert

Sebastian Mallaby

Paul A. Volcker Senior Fellow for International Economics

About the Project

While there are many excellent books about the engineers and entrepreneurs of Silicon Valley, no authoritative account exists of the financiers who enable the moonshots. In my next project, I will write the comprehensive account of venture investing in Silicon Valley, showing how the region's distinctive network-based social capital is nurtured by hyper-connected investors and exploring the full range of approaches: VCs, angel investors, incubators, specialist venture creditors, growth-equity funds, and the various fintech challengers to the traditional model. I will explain what other regions might learn from the Valley's example, ask what sorts of innovation venture capitalists may support in the future, and explore whether the extraordinary contribution of the Valley to the global process of creative destruction is likely to persist.

My account will also situate VC and angel investing in the context of the long-running debate on rival visions of capitalism. The tech finance of the Valley is a sort of anti-Wall Street version of finance: indifferent to Modern Portfolio Theory and quantitative models; long-termist rather than short-termist; involved rather than arms-length; immune to the accusation that financiers shuffle pieces of paper rather than funneling capital to the real economy. At a time when the short-comings of the "financialized" Anglo-American model of capitalism are widely debated, and when VC-backed "unicorns" are willing to defer public listings for longer than ever, Silicon Valley’s financial model may offer part of an alternative solution to the age-old problem of how best to funnel capital from savers to productive companies.