Venture capital firms seem to take great risks, when they supply venture capital funding, but the truth is very different. They are usually very careful where their money goes, and what use it is put to. Originally developed by wealthy private families, the funding was first used in the early nineteenth century, when Laurence Rockefeller supplied the money to begin development of two big aeroplane works, Eastern Air Lines and Douglas Aircraft.



Another person who played heavily in venture capital was Eric M. Warburg in the nineteen thirties, which would eventually become Warburg Pincus, very involved in investments in leveraged buyouts. Venture capital is also another string to their bow.

Wealthy families, movers and shakers mostly used development capital in the time before World War Two. But after the War, two venture capital firms, The American Research And Development Corporation or ARDC, and J.H. Whitney and Company. These were the newer companies involved in venture financing.

Other firms have sprung from these parent firms. Some former employees created Greylock Partners from ARDC, as did James Morgan who created Morgan, Holland Ventures, which, in turn, became Flagship Ventures.

Silicon Valley firms, long known for computers and their components, have benefited enormously from venture capital firms and venture capitalist funding. Even some who were considered very high risk were awarded their chances. This was a hit and miss time, where many firms went broke, due to the ever-increasing growth of the industry, and the competition engendered. After a crash in the nineteen eighties, foreign corporations, such as Korea and Japan, moved in and flooded the market with capital. This resulted in many companies closing down or going to the wall, sparking a rethinking, and investment in buyouts that were leveraged and capital investments that had the potential for growth.

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