Venture capital plays only a minor role in funding basic innovation. In 1997, VCs only invested 6%, or $600 million, went to startups. Around $1 billion of the total venture-capital pool went to R&D.
The majority of VC capital went to follow-on funding for projects originally developed through the far greater expenditures of governments ($63 billion) and corporations ($133 billion).
A venture capitalist buys a stake in an entrepreneur’s idea, nurtures it for some time, and then exits with the help of an investment banker.
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