Institutional Capital Infrastructure ● Professional Structures : Formalized fund management, standardized investment processes, and substantial minimum investment thresholds ● Government Alignment : Federal initiatives like VCAP and VCCI designed to complement institutional VC frameworks ● Scale-Oriented : Designed for efficiency at scale, optimized for larger investments in more developed companies Pre-Institutional Capital Dynamics ● Personal Decision-Making : Highly personal investment decisions rather than institutional committees ● Network-Based : Reliance on networks for deal flow rather than formal pipeline development ● Relationship-Intensive : Higher emphasis on founder relationships and proximity, less on standardized metrics ● Community Ecosystem : Angel investing thrives in community-based ecosystems with close entrepreneur relationships Implications for Policy ● Effective mobilization of pre-institutional capital requires policies specifically designed for its unique characteristics ● While institutional capital vehicles benefits from macro-scale structural interventions, pre-institutional capital may respond better to micro-incentives ● Tax-based incentives that directly benefit individual investors may prove more effective than pooled capital programs for mobilizing angel investment Just as founders can face barriers in reaching angel investors, venture capital fund managers—including those with established track records—can struggle to access institutional sources of capital. This reflects a broader challenge of accessibility across the capital continuum. 3. Venture Capital Development in the United States Foundations (1940s-1970s) ● American Research and Development Corporation (ARD) : Founded in 1946, pioneered the professional VC model ● Small Business Investment Companies (SBICs) : Created by the Small Business Investment Act of 1958, provided 75% of early-stage VC by 1968
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