In relative terms, venture capital amounts to a small share of overall capital markets, but its value goes beyond a simple dollar figure.
Venture capital spurs growth at the critical early stages of growing companies' development.
Moreover, venture capitalists don't just throw their money at startup companies hoping to get lucky and pick a winner. They become involved as board members and management advisors, suggesting strategic partnerships and helping to refine business plans. It's important to keep an eye on the straight dollar amount of venture capital in the economy, but it's just as important to remember the exponential ripple effect of the cash. Moreover, venture-capital backed firms are more technologically innovative than other firms. In 1997, it was disbursed to some 2,485 companies, five times more than in 1980.