Venture CapitalismCommentary by Pete du Pont
February 28, 1997
Host intro: A recent issue of The Economist carried a story and an editorial about American venture capitalism. Commentator Pete du Pont of the National Center for Policy Analysis reports both had nice things to say about this feature of the American economic genius.
The story explained how venture capitalism works. An entrepreneur may have a great idea or invention, but he usually doesn't have management expertise -- or, of course, money. Venture capitalists provide both. They don't just dole out the cash and wait for their returns. They sit on boards. They bring in a network of accountants, lawyers and even landlords who'll supply services at a fraction of their usual cost. They put a stamp of approval on a start-up and provide money when a bank wouldn't touch the company with a fork. They grease the wheels of the American economy, and they do it mostly behind the scenes.
The editorial was equally interesting. The Economist, of course, is a British publication, and the tone was one of longing and appreciation for a peculiarly American way of doing business that venture capitalism typifies: "bright ideas occur everywhere," the editorial said, "but Americans remain unusual in their willingness to accept risk; in their tolerance of career shifts; above all, in their joyful attitude to business."
And think how much more fun it could be with fewer regulations, lower taxes on business, and a cut in the capital gains tax?
Those are my ideas. And at the NCPA, we know ideas can change the world. I'm Pete du Pont, and I'll see you tomorrow.
Host outro: Monday, has Pete du Pont found the last Republican?