An earned income of more than $200,000 ($300,000 with a spouse or spousal equivalent) in each of the two previous years, with a similar expectation for the current year A net worth of more than $1 million (alone or with a spouse or spousal equivalent), not including a principal residence A Series 7, 65, or 82 securities license in good standing.
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Harvard Business School professor Georges Doriot is generally considered the “Father of Venture Capital.” He started the American Research and Development Corporation in 1946 and raised a $3.58 million fund to invest in companies that commercialized technologies developed during WWII. The corporation’s first investment was in a company that had ambitions to use X-ray technology for cancer treatment. The $200,000 that Doriot invested turned into $1.8 million when the company went public in 1955.
Due diligence in venture capital typically involves a thorough analysis of the prospective company’s business model, market potential, financial health, legal matters, and the competence of the management team. Firms may use internal resources or hire external experts to conduct specialized assessments.
Ensuring Quality over Quantity.
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Startup financing began to resemble the modern-day venture capital industry after the passage of the Investment Act of 1958. The act enabled small business investment companies to be licensed by the Small Business Administration, which had been established five years earlier.