RISK AND REWARD: Venture Capital and the Making of America's Great Industries

by Thomas & Jack Rivkin Doerflinger ‧ RELEASE DATE: Feb. 17, 1986

A soundly conceived but poorly executed study of the socioeconomic contributions made by venture capitalists. Doerflinger, a securities analyst at Paine Webber, and Rivkin, president of PW's venture-capital unit, have firsthand knowledge of the professional investors who run big risks by bankrolling start-up companies. In light of historic realities, the authors peg venture capitalists as best equipped to provide the funds innovative entrepreneurs require to get their enterprises off the ground and into ""sturdy maturity."" To prove this thesis, Doerflinger and Rivkin review how venture capital figured (or did not) in the genesis of six key US industries: railroads; steel; telephony; automobiles; computers; and biotechnology. Speculative investment interest can arrest an industry's orderly development, they conclude, citing railroads (many of which were underwritten by junk bonds) as a case in point. On the other hand, fledgling firms (e.g., those working on designer genes), which are acquired or controlled by major corporations, may find their creativity stifled by organizational exigencies, including the need to show profits fast. By contrast, they say, EDP concerns have been generally well served by venture capitalists. In trying to cover a past that dates back to 1830 and provide for a future extending well into the next century, the authors spread themselves thin. Consequently, it is not at all clear precisely how the idea that venture capitalists deserve special consideration might be acted upon. Also troublesome is a tendency to ignore inconvenient facts, e.g., the military sponsorship which led to the 1948 development of the transistor at Bell Labs. The hit-or-miss text offers some worthwhile perspectives on the vital role smart seed money can play, but John W. Wilson's The New Venturers (1985) provides a more focused and informative version of essentially the same story.

Pub Date: Feb. 17, 1986

ISBN: N/A

Page Count: -

Publisher: Random House

Review Posted Online: N/A

Kirkus Reviews Issue: Jan. 15, 1986

Categories: NONFICTION