Venture Capital Built America. The Next Great Managers Will Rebuild Venture Capital.
Venture capital built America’s innovation engine.
In the nineteenth century, American syndicates funded whaling expeditions and early industrial projects knowing that most would fail but one success could change their fortunes. This asymmetric mindset became formalized after World War II when Georges Doriot founded the American Research and Development Corporation (ARDC) to commercialize wartime discoveries. ARDC’s $70,000 investment in Digital Equipment Corporation became worth more than $355 million at IPO, proving that backing unproven innovators could generate nation-shaping outcomes. This success helped drive the Small Business Investment Act of 1958 and accelerated the creation of modern venture partnerships.
Venture-backed companies became the backbone of U.S. economic dominance.
By the 1970s and 1980s, early firms along Sand Hill Road were financing the companies that built the modern economy — Intel, Apple, Genentech, FedEx, Cisco, and eventually Google. These firms did not just create products. They created entire sectors. Over time, venture-backed companies represented roughly two-thirds of total U.S. public market capitalization, the majority of corporate R&D, and more than half of all U.S. IPOs for four decades, making venture capital central to America’s global leadership in technology, productivity, and scientific output.
The industry lost precision as it expanded faster than its discipline.
The number of venture firms swelled to more than 4,000, fueled by ERISA-driven inflows, the internet boom, and the post-2008 liquidity surge. Mega-funds managing $10–50 billion began behaving more like RIAs than high-conviction partnerships. Median IRRs drifted toward 13 to 14 percent, barely outperforming public markets once illiquidity was considered, while bottom-quartile funds routinely destroyed capital. Portfolios ballooned, diligence became procedural, and relationships weakened as firms optimized for deployment rather than insight.
Technological convergence exposed the limits of bloated venture models.
The last five years brought a historic alignment of forces. AI adoption surpassed 60 percent across global enterprises. Semiconductor investment exceeded $540 billion annually. Robotics shipments grew 14 to 20 percent per year. Global battery capacity advanced toward an 8-terawatt-hour trajectory. Governments committed more than $2 trillion to reshoring, clean energy, defense, and industrial reinvestment. These shifts created a frontier defined not by software iteration but by deep science, national capability, and capital-intensive innovation that demands technical fluency and operational speed.
This new frontier rewards small, sharp, technically fluent investors.
Between 2022 and 2024, smaller and sector-focused funds consistently outperformed mega-funds in both multiples and DPI. Founders trusted their judgment, not their balance sheets. These managers moved faster, kept concentrated portfolios, and engaged deeply in domains like AI infrastructure, autonomy, manufacturing, and energy systems. Their incentives were tied to performance, not asset accumulation — a structural advantage large funds cannot replicate.
Founders are choosing specialized emerging managers over billion-dollar platforms.
Technical founders in AI, robotics, aerospace, materials, and national security increasingly prefer investors who can challenge assumptions, provide sector-specific expertise, and commit early with conviction. Large RIAs, constrained by ownership thresholds, committees, and slow approval cycles, often arrive after the real opportunity has been won. Meanwhile, elite emerging managers earn their edge through repeated founder referrals, operating experience, and the ability to identify inflection points before the market prices them in.
America’s next decade of strength depends on disciplined venture investing.
The industries that will define national security, industrial capacity, energy independence, and digital infrastructure cannot be financed by banks or public markets. They require early, conviction-led capital. They require investors who can evaluate complex science, navigate regulation, and partner closely with founders solving critical national problems. They require the same disciplined investing behavior that built Silicon Valley in the first place: focus, expertise, and boldness.
Venture capital is not just part of America’s future. It is the determining factor.
The firms that will shape the next century are already being formed — in labs, autonomous manufacturing facilities, defense technology hubs, energy breakthroughs, and AI-native infrastructure systems. They will not emerge from portfolios holding thousands of positions. They will come from concentrated, high-judgment emerging managers who operate close to the frontier and invest before consensus forms. For allocators, the implication is unmistakable: the most powerful returns, the most important technologies, and the most consequential companies will be built by a small number of managers who still practice venture capital as it was meant to be practiced.
