● Limited Partnership Structure : Established the standard legal framework featuring carried interest and management fees Growth and Institutionalization (1970s-1990s) ● ERISA "Prudent Man" Rule Revision (1979) : Permitted pension funds to invest in VC, dramatically increasing available capital ● Capital Gains Tax Reduction (1978) : Reduced rate from 49.5% to 28%, improving after-tax returns ● Early Success Stories : Venture-backed companies like Apple, Microsoft, and Cisco demonstrated extraordinary potential returns ● Emergence of Sand Hill Road : Created industry nerve center that reinforced Silicon Valley's dominance Maturation and Cycles (1990s-Present) ● Internet Boom and Bust : VC commitments surged from $7.4B (1995) to $106B (2000), followed by contraction ● Emergence of Micro-VCs : Smaller funds filled early-stage funding gaps beginning in mid-2000s ● The Unicorn Era : Companies remained private longer with abundant late-stage capital ● Specialization : Development of sector-focused and stage-specific funds 4. Angel Investment in the United States Early Angel Investing (Pre-1990s) ● Traditional Model : Wealthy individuals, often former entrepreneurs, provided first external capital ● "Friends and Family" : Earliest risk capital from entrepreneurs' personal networks ● Regional Concentration : Initially concentrated in technology-rich regions like Silicon Valley Professionalization and Organization (1990s-2010s) ● Angel Groups Formation : Started with Band of Angels (1994), Common Angels (1998) ● Angel Capital Association : Founded in 2004 as professional association for angel groups ● Standardized Deal Terms : Developments like Y Combinator's SAFE (2013) reduced transaction costs
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