Venture-capital investments are exploding. So just how effective are these businesses?

Research by Samuel S. Kortum of Boston University and Josh Lerner of Harvard University suggests that venture capital produces six time as many patents as a similar amount of corporate research and development funding.

At that rate, and with investment levels rising dramatically, we might reasonably expect an explosion of new invention.

• PricewaterhouseCoopers reports that venture-capital investment surged in the second quarter of this year to a new high of $7.67 billion.

• That constitutes a jump of 76 percent over the previous quarter -- and more than double the year-earlier level.

• Venture capital went to 992 companies -- also a new record.

• Kortum and Lerner say that although venture capital has accounted for less than 3 percent of corporate R&D in recent years, it has generated as much as 15 percent of U.S. business innovations.

Source: Gene Koretz, "The Magic of U.S. Venture Capital," Business Week, October 11, 1999.