Risk Capital & Scale-Up Finance

Pre-modern era · documented for centuries

Rotating savings and credit associations became a global informal financing tradition among small traders and households

Known as susu in West Africa, chit funds in India, hui in China and tandas in Latin America, these member-run pooling schemes let people without access to banks finance small enterprises long before formal microfinance existed.

1397 · 629 years ago

The Medici Bank pioneered branch-based lending and double-entry bookkeeping for merchants and artisans

Founded in Florence, the bank extended credit and financial services to merchants and craft guilds across Europe, and its accounting methods spread widely, giving smaller enterprises more reliable tools to manage and demonstrate creditworthiness.

1916 · 110 years ago

The Wallenberg family founded Investor AB in Sweden

Investor AB became an early vehicle for family-based investment in emerging industrial companies. It backed Swedish firms including ABB, Atlas Copco and Ericsson during the first half of the 20th century, illustrating the pre-institutional era of venture finance dominated by wealthy families.

1931 · 95 years ago

The UK's Macmillan Committee identified a structural financing gap facing smaller companies

A government inquiry into finance and industry found that small and medium firms struggled to raise the modest amounts of capital they needed, a shortfall long referred to afterward as the Macmillan Gap and still cited in SME finance policy.

1938 · 88 years ago

Laurance S. Rockefeller and Eric M. Warburg financed new aviation ventures and founded E.M. Warburg & Co.

Rockefeller helped finance the creation of Eastern Air Lines and Douglas Aircraft, while Eric Warburg founded the firm that became Warburg Pincus. These are examples of the pre-war pattern in which risk capital for young companies came almost exclusively from wealthy individuals and families.

1945 · 81 years ago

The Bank of England and British clearing banks set up the Industrial and Commercial Finance Corporation

Later known as 3i, the institution was created specifically to lend to smaller companies that banks otherwise judged too small and risky, a direct response to a financing gap identified before the war.

1946 · 80 years ago

Georges Doriot founded the American Research and Development Corporation, the first institutional venture capital firm

Founded by Georges Doriot with Ralph Flanders and Karl Compton, ARDC was created to encourage private-sector investment in businesses run by returning World War II soldiers and became the first institutional private-equity firm to raise capital from sources other than wealthy families. Structured as a publicly traded fund, it raised capital from institutions to back new technology companies, later profiting enormously from an early investment in Digital Equipment Corporation and proving the venture model viable. J.H. Whitney & Company was founded the same year, marking the birth of modern, professionally managed venture capital.

• Digital Equipment Corporation became the fund's defining success

1950s · about 70 years ago

Japan's post-war main bank system tied smaller manufacturers to a lead lender for financing and oversight

Banks at the centre of keiretsu industrial groups provided long-term relationship lending and close monitoring to affiliated small and medium suppliers, a financing model credited with supporting Japan's rapid industrial recovery.

1957 · 69 years ago

ARDC funded Digital Equipment Corporation, returning over 1200 times its investment

ARDC's investment in DEC was valued at more than $355 million after the company's 1968 IPO, an annualised return of 101 per cent. The success demonstrated that a single venture investment could justify an entire fund, establishing the economic logic of the asset class.

1958 · 68 years ago

The US Small Business Investment Act created licensed, government-backed venture funds

Congress passed the Small Business Investment Act of 1958, allowing the Small Business Administration to license private Small Business Investment Companies to finance and manage small entrepreneurial businesses. SBICs could borrow against government guarantees to invest in growing firms, substantially increasing the pool of risk capital available to small business well before private venture capital had matured. The Act also provided tax breaks that contributed to the rise of private-equity firms and is regarded as one of the first steps toward a professionally managed venture capital industry.

1959 · 67 years ago

The Batavia Industrial Center opened in New York as the first business incubator

A disused factory was subdivided to house several small tenant businesses sharing services, mentoring and equipment, establishing an incubator model later replicated by universities, cities and private investors worldwide.

1960s · 66 years ago

Private-equity firms adopted the limited partnership fund structure and 2-and-20 compensation

Firms organised limited partnerships in which investment professionals served as general partners and passive investors supplied capital. The accompanying compensation model of a 1.0–2.5 per cent annual management fee plus carried interest of up to 20 per cent of profits remains the industry standard.

1962 · 64 years ago

West Coast investors formed the first Californian venture firms around Draper and Johnson

Draper and Johnson Investment Company was formed in 1962 by William Henry Draper III and Franklin P. Johnson Jr. In 1965 Sutter Hill Ventures acquired its portfolio as a founding action, and Pitch Johnson formed Asset Management Company, seeding the Silicon Valley venture ecosystem.

1970 · 56 years ago

Bill Ferris founded IVC, beginning venture capital in Australia

Ferris's firm started the first of three waves of venture capital in Australia and New Zealand. A later boom in 2018 left more than one hundred active VC funds, syndicates or angel investors operating in the region.

1971 · 55 years ago

NASDAQ opened as the first electronic stock exchange

An electronic quotation system gave smaller, fast-growing companies a listing venue distinct from established exchanges, creating a public exit route that made early-stage venture investment more attractive by offering a path to liquidity.

1972 · 54 years ago

Kleiner Perkins and Sequoia Capital established independent firms on Sand Hill Road in Menlo Park

Kleiner Perkins was the first venture firm to open an office on Sand Hill Road, followed by Sequoia. Their location gave access to Santa Clara Valley semiconductor, computer and software companies, creating the geographic cluster that defined venture capital for decades.

1973 · 53 years ago

Leading venture capitalists formed the National Venture Capital Association

With the number of new venture firms increasing, the NVCA was founded to serve as the industry trade group for venture capital. Its creation marked the industry's emergence as an organised interest with collective representation.

1974 · 52 years ago

United States Congress enacted ERISA, restricting pension investment in risky assets

The Employee Retirement Income Security Act prohibited corporate pension funds from holding certain risky investments, including many in privately held companies. The restriction initially cut venture capital off from a large pool of institutional money.

1976 · 50 years ago

Muhammad Yunus began lending small sums to poor craftspeople in the village of Jobra

Lending from his own pocket to people excluded from bank credit, Yunus ran an experiment that grew into Grameen Bank and the modern microfinance movement for very small enterprise.

• Grameen Bank and Yunus were awarded the Nobel Peace Prize

1978 · 48 years ago

US Labor Department relaxed ERISA under the prudent man rule, unlocking pension capital

The reinterpretation allowed corporate pension funds to invest in venture capital as an asset class, opening a major new source of capital. That same year the industry recorded its first major fundraising year, raising approximately $750 million. Capital gains tax reduction from 48.5 to 20 per cent in the same decade reinforced the effect.

1980s · 46 years ago

The venture capital industry expanded to over 650 firms and $31 billion under management

Public successes such as Digital Equipment Corporation, Apple and Genentech drew a proliferation of new firms, up from a few dozen at the start of the decade. Capital managed rose from $3 billion to $31 billion, though returns declined sharply amid competition and the 1987 crash.

1987 · 39 years ago

Corporate and bank venture arms closed or refocused in-house venture units after the 1987 crash

After the IPO market collapsed, General Electric and Paine Webber sold or shut their venture arms, while units at Chemical Bank and Continental Illinois shifted toward mature companies. Even J.H. Whitney and Warburg Pincus moved toward leveraged buyouts and growth capital.

early 1990s · 36 years ago

The World Wide Web reinvigorated venture capital as internet startups were founded

The advent of the Web drew investors to companies with huge growth potential; Netscape and Amazon were founded in 1994 and Yahoo! in 1995, all venture-funded. A wave of internet IPOs from 1992 to 1997 generated enormous returns and reset expectations for the asset class.

1991–2000 · 35 years ago

Venture capital funds swelled to over $90 billion committed at the dot-com peak

The number of venture funds raised rose from about 40 in 1991 to more than 400 in 2000, with capital committed rising from $1.5 billion to over $90 billion. Venture investment reached 1.087 per cent of US GDP in 2000, nearly nineteen times the 1994 level.

Early 2026 · 6 months ago

The International Finance Corporation reaffirmed its estimate of a multi-trillion-dollar SME financing gap in emerging markets

Updated analysis continued to put unmet credit demand among small and medium enterprises in developing economies at several trillion dollars, with the shortfall concentrated among women-led and informal firms least served by banks.

• Women-led firms faced a disproportionately wide gap

Early 2026 · 6 months ago

Indonesia raised the lending ceiling under its subsidised KUR credit programme

The state-backed People's Business Credit scheme, which lends to micro and small enterprises at reduced interest rates under a government guarantee, again expanded its annual budget allocation, remaining one of the largest SME credit programmes in Southeast Asia.

2025 · 1 year ago

US venture capital reached a record $321.6 billion invested

Investment in the United States hit the highest annual total on record, driven largely by very large financings and rising valuations in artificial intelligence. Levels remained historically elevated into 2026, when KPMG reported $144.9 billion across 3,644 deals in the second quarter alone.

2025 · last year

Abu Dhabi's Hub71 technology ecosystem added further cohorts of incubated start-ups

The government-backed programme, which combines subsidised office space, mentorship and access to state-linked investors, continued expanding as Gulf states competed to attract founders and early-stage capital away from other regional hubs.

2025 · last year

Brazil kept its Pronampe credit-guarantee programme running for small businesses

The scheme, which guarantees a share of bank loans made to micro and small enterprises, continued operating as a permanent facility after starting as an emergency pandemic measure, helping smaller firms access credit at lower risk premiums.

2025 · last year

Kenya's central bank revoked the licences of further unregistered digital lenders

Enforcement of the 2021 law requiring digital credit providers to register continued, with regulators removing non-compliant mobile lending apps from the market to curb predatory rates charged to small borrowers and micro-enterprises.

• Some previously popular lending apps were delisted from major app stores

2025 · last year

Start-up funding across Africa fell for a further year, extending a slide from its 2021–22 peak

Venture investment into African start-ups, concentrated in Nigeria, Kenya, Egypt and South Africa, stayed well below the highs reached earlier in the decade, pushing many founders toward revenue-based financing and grants instead of equity.

• Nigeria and Kenya remained the largest recipients despite the decline

2025 · last year

Saudi Arabia's Jada Fund of Funds committed further capital to SME-focused investment vehicles

The PIF-backed programme, created to deepen Saudi Arabia's venture and private-credit market for small and medium enterprises, added new fund commitments as part of a broader push to build a domestic financing ecosystem beyond bank lending.

Late 2025 · 8 months ago

China promoted 'patient capital' to steer long-term funding toward smaller technology firms

State-guided investment funds took a larger role in financing smaller manufacturers and technology firms as private venture capital pulled back, with policymakers explicitly encouraging longer investment horizons over quick returns.

Late 2024 · 2 years ago

Nigeria began disbursing its World Bank-backed i-DICE programme for digital and creative enterprises

The initiative combined grants and matching investment to support start-ups and small firms in software, media and other digital and creative industries, backed by international development finance alongside domestic funding.

Late 2024 · 2 years ago

Kenya restructured its state-backed Hustler Fund microloan scheme

Facing low repayment rates and criticism of its design, the government adjusted the terms of the scheme, which offers small, collateral-free loans to informal traders and entrepreneurs and is one of the country's largest financial-inclusion programmes.

2021 · 5 years ago

South Korea saw venture investment peak at US$10 billion before a sharp cut

A decade-long investment boom, backed by the government and mega-corporations such as Kakao, Smilegate, SK and Lotte, peaked in 2021. New venture capitalists then announced a 40 per cent cut in financing in 2024.

2021–2023 · 5 years ago

The European Green Deal drove a 30% rise in greentech venture capital in the EU

Policies fostered under the Green Deal contributed to growth in venture funding specifically for green technology companies, even as other sectors experienced a downturn. It illustrates how policy can steer venture capital toward targeted sectors.

2021 · 5 years ago

Australian and New Zealand startups attracted a record AUD $10 billion across 682 deals

The State of Startup Funding report recorded over AUD $10 billion invested in Australian and New Zealand startups, a threefold increase on the $3.1 billion invested in 2020. By 2022 the largest funds were Blackbird Ventures, Square Peg Capital and Airtree Ventures.

2020 · 6 years ago

The venture capital industry recovered to $80 billion in fresh capital

After fortunes turned around in 2010 with $21.8 billion invested, the industry grew steadily to raise $80 billion in fresh capital by 2020. A brief decline in 2022 was followed by renewed recovery.

2019 · 7 years ago

MENA startup ecosystem recorded its first unicorn exit with Careem's sale to Uber

MAGNiTT's H1 2019 report counted 238 startup investment deals totalling $471 million, up 66 per cent in funding on the previous year. Careem's $3.1 billion acquisition by Uber was the region's first unicorn exit, following Souq.com's $650 million sale to Amazon in 2017.

2016 · 10 years ago

Poland established new legal institutions for seed and startup investment

From 2016 new legal vehicles were created for entities investing in enterprises at the seed or startup phase. By March 2019 there were 130 active VC firms in Poland managing an estimated €2.6 billion, having invested in over 750 companies.

2016 · 10 years ago

Singapore's government launched SGInnovate and NRF grants for startup investment

The National Research Foundation gave grants of up to around $30 million to four large local enterprises for investing in city-state startups, while SGInnovate was launched to support deep tech startups. The same year Singapore recorded 100 private equity and venture deals worth US$3.5 billion, a record.

2013–2023 · 13 years ago

European venture capital invested €96 billion in nearly 27,000 companies

European venture investment grew significantly over the decade, with €12.9 billion invested in 2023 across 4,764 companies, 99 per cent of them SMEs. VC-backed European companies employed more than 988,000 people at 13,524 mainly small and medium enterprises by the end of 2023.

2013 · 13 years ago

United States allowed public solicitation of private offerings under Rule 506(c)

Following the Jumpstart Our Business Startups Act, the prohibition on general solicitation was eliminated for certain offerings. Since 2013 issuers may advertise offerings publicly provided all purchasers are verified accredited investors, easing fundraising for venture funds and startups.

2010 · 16 years ago

Israel led the world in venture capital invested per capita

Israel attracted $170 per person compared with $75 in the United States, reflecting an economy built on knowledge-based industries. The country hosts around 70 active venture funds, including 14 international VCs with Israeli offices, plus 220 international funds investing there.

2006 · 20 years ago

India reached $7.5 billion in private equity and venture capital

The total was spread across 299 deals, marking the scaling up of India's risk capital market. Vietnam meanwhile received its first foreign venture capital funds, including IDG Venture Vietnam and DFJ Vinacapital.

2000 · 26 years ago

The Nasdaq crash triggered the collapse of the dot-com venture bubble

The technology slump beginning in March 2000 shook the entire venture industry as startup valuations collapsed, forcing firms to write off large proportions of their investments and leaving many funds under water. By mid-2003 the industry had shrunk to about half its 2001 capacity, with investors offloading commitments in the secondary market.

1999–2014 · 27 years ago

Women in venture capital saw partner representation fall from 10% to 6%

Babson College's Diana Report found the share of women partners in VC firms declined over the period. Female-founded companies raised 2.8 per cent of venture capital in 2020, the highest recorded, falling to 2 per cent of US VC funding in 2021.