Venture financing, a form of entrepreneurial finance, has played a central part in the story of the digital revolution. Indeed, Silicon Valley, the global center of the venture capital industry, draws its name from the substrate of the contemporary semiconductor, which is the computational engine for all digital products. The continuing performance improvements characteristic of Moore’s Law provided ever new potentialities for new generations of startups. While improvement in processing power was the core engine for this venture capital-financed entrepreneurship, the new firms were not only in semiconductors, but also in layers in stack above the processor itself. There were semiconductor firms of various generations including Intel and AMD, Cirrus Logic, and even later NVidia. There were computer firms ranging from Tandem Computers to SUN Microsystems and Silicon Graphics on to Apple and Osbourne. As there were more computers, users wanted to network them together and with this came 3Com, Cisco, and many other firms; all of which used semiconductor chips. In addition to semiconductor components, they needed disk drives, input devices, printers and many other devices – many of which were also pioneered in Silicon Valley. However, the most powerful development of all was the establishment of an independent software industry – the most successful of these would be Microsoft, but there would be many, many more, including Oracle, Adobe, Intuit and others successfully established in SV. Eventually, these technologies would be united in the Internet, whose technologies were developed at CERN in Switzerland and the University of Illinois. At each stage, in this development venture capitalists could be found that were willing to invest in the new firms (Kenney 2011). These entrepreneurial financiers had, of course, only one goal – capital gains. The vehicle for these capital gains was, quite 3 simply, a firm whose product grew so rapidly that other investors would be willing to buy that firm, or equity in that firm, at massive capital gains multiples.
December 1, 2018