Venture Capital is Software’s Parallel Financial Guild
Venture capitalists form an independent culture and distinct tradition of knowledge from East Coast financiers. Their skills in financing software will not translate cleanly to politics or industry.
Venture capital in the U.S. is a substantial category of investment, accounting for $170 billion in 2023 according to one estimate, equal to about half a percent of U.S. GDP.1 Venture capital’s influence on the U.S. economy is far larger than the dollar amount of its investments would suggest. One of the largest venture capital firms, Andreessen Horowitz, has $35 billion in assets under management, whereas the largest asset manager, BlackRock, has $10 trillion, almost 300 times more.2 Nevertheless, venture capitalists and startup accelerators with similar models like Y Combinator have financed the software and internet companies which have transformed the economy and daily life throughout the world, through its critical investments in companies including Google, Facebook, OpenAI, Nvidia, and many others. Perhaps a quarter or a third of venture investment goes into software in a normal year.3 A cluster of software-focused venture capital institutions, many of them headquartered on Silicon Valley’s Sand Hill Road, has formed an independent culture and a distinct tradition of knowledge.