Venture 101: What is Venture Capital?

Category
Venture 101
Written by
Garrett Bryant
Published on
November 8, 2021

Venture capital (VC for short) is, in essence, a source of private financing for startups and emerging companies that need or want additional funding in order to grow. VC is a form of private equity, which means the companies it invests in are privately owned and not available on the public market.

Read on for a little dive into the history of VC and see how Sweater’s changing its future.

The Early Days of Venture

Even if you’ve never opened a book on the Industrial Revolution or watched a History Channel documentary on the birth of big business in America, you probably recognize names like Rockefeller and Vanderbilt—families associated with immense wealth and influence for generations. You also might be familiar with some of the less-savory tactics the men behind these famous names used to achieve and maintain their wealth and fame...but did you know that wealthy families like the Rockefellers are also the ancestors of modern venture capital? If so, you can probably skim to the last section.

John D. Rockefeller

As these families accumulated wealth from their own business ventures, they looked for ways to invest that money into potentially high-return, high-tech enterprises. If one of these ventures proved successful, they’d rake in massive returns. Thus began one of the most lucrative investment strategies among the wealthy elite: finding and investing in promising companies before anyone else has the opportunity.

VC Firms & the Rise of Venture Capital

Eventually, these families started hiring savvy folks to scout early, high-potential deals and manage those investments, which, in turn, led to the creation of the first VC firms—Venrock (formerly Rockefeller Brothers, Inc.), founded by the Rockefeller family, and J.H. Whitney by the Whitney family. Both firms were established in 1946, and both are still major players in VC today.

1946 also saw the establishment of the first institutional VC firm, American Research and Development Corporation (ARDC), by Harvard Business School professor General Georges F. Doriot and a group of banking and investing powerhouses in Boston, MA.

Often called the “father of venture capital,” Doriot completely transformed VC, paving the way for the modern venture capital model we see today. He saw the rapidly growing interest in private equity from institutional investors and latched onto the opportunity. By bringing more than just family money to the table, Doriot and ARDC proved VC firms could provide active, hands-on management to their venture investments.

Startups and emerging high-growth companies now sought after VC firms like ARDC because of the additional partnerships and support they brought along with their investment dollars. This desire for more institutional VC firms sparked an explosion in venture capital through the 1960s and 70s, leading to the establishment of firms like Sequoia Capital (early investors in Apple, Google, and LinkedIn) and Kleiner Perkins (AOL, Amazon, and Electronic Arts), two standouts among the dozens that now occupy the infamous Sand Hill Road in Silicon Valley.

A New Era of Venture Capital with Sweater

At its core, venture capital is still about the money, and it always will be. But thanks to the vision of pioneers like Georges Doriot, VC has evolved over the last century from being solely about financial support to a holistic partnership that gives startups and founders the tools and network they need to rocket forward. At Sweater, we’re taking it even further.

The current landscape of investing is nothing like it was in the 60s and 70s, or even the 2000s for that matter. More than ever before, people are well-informed and interested in investing. Everyday investors looking to grow generational wealth and get ahead are demanding access to more alternative investing opportunities.

At Sweater, we’re answering that call. We’re revolutionizing the current model by bringing venture capital to this rapidly growing population of retail investors for the very first time. And if you happen to be an accredited investor already invested in VC, we’re doing it a little differently than the old guard—and we’re worth the look for portfolio diversification.

Sweater creates opportunities for regular folks to sink their teeth into the world of venture capital and help groundbreaking companies propel the world to a better future. With our Scout Network and potentially endless pool of investors, we can provide unparalleled institutional support to founders and our portfolio companies.

Sweater is changing the meaning of VC. We aim to be the next venture thought leaders, democratizing venture capital, educating both industry veterans and those new to VC in order to make the VC world better and create access to greater wealth-building opportunities for everyone—accredited or not.

We’re the VC fund for everyone. Join the waitlist for more information.

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Disclosure: Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectus contains this and other information about the Fund and can be obtained by calling 1-888-577-7987 or by visiting the Fund’s website at www.sweaterventures.com/cashmerefund. Please read the prospectus carefully before investing. All investments involve risks, and past performance is no guarantee of future results.