History of Venture Capital Funding
The main aim of this article is to shed light on the history of Venture capital funding, which means, infusing long term equity finance, for the purpose of providing a solid capital foundation for future growth of a company. Read on to know more on Venture capital funding history.
The first half of the 20th century was the realm of rich and affluent individuals and families. Some of the notable investors in private companies during these times were
the Vanderbilts, Whitneys, Rockefellers and Warburgs. Eastern Air Lines and Douglas Aircraft were both financed by the Rockefeller family in 1938.
Origin of Venture capital funding
It is interesting to note that money orders were mainly the sphere of wealthy individuals and families, before World War II. The true private equity investments began to emerge not until after World War II. American Research and Development Corporation and J.H. Whitney & Company were the first two venture capital firms were founded in 1946. Georges Doriot, known as the "father of venture capitalism" founded the American Research and Development Corporation. The main idea was to support private sector investments in businesses which were run by soldiers who were coming back from World War II. ARDC is recognized as to when its 1957 investment of $70,000 in Digital Equipment Corporation would be grow over $355 million after the company's initial public offering in 1968.
Looking back in the history of VC funding, it is seen that the past employees of ARDC went on to establish several well-known venture capital firms, like Greylock Partners and Morgan, Holland Ventures, the predecessor of Flagship Ventures. ARDC continued to invest until 1971 when Doriot retired. In 1972, Doriot merged ARDC with Textron after investing in more than 150 companies.
John Hay Whitney and his partner Benno Schmidt founded the J.H. Whitney & Company as the Venture capital funding history reveals. Investing since the 1930s, they set up the Pioneer Pictures in 1933 and thus acquired a 15% interest in Technicolor Corporation. Florida Foods Corporation has been by far, Whitney's most famous investment. The company developed a new method for carrying nutrition to American soldiers as Minute Maid orange juice, which was later sold to The Coca-Cola Company in 1960. J.H. Whitney & Company continued to make investments in leveraged buyout transactions, raising around $750 million for its sixth institutional private equity fund in 2005.
The history of Venture capital funding, though not very old is sure interesting.