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Over the last several decades, governments have collectively pledged to slow global warming. But despite intensified diplomacy, the world is already facing the consequences of climate…
Venture Capital in Silicon Valley and Beyond
Project Expert
About the Project
While there are many excellent books about the engineers and entrepreneurs of Silicon Valley, little had been written about the financiers who enable the moonshots. I aim to fill this gap with my latest book, The Power Law: Venture Capital and the Making of the New Future. Published in February 2022, The Power Law delivers a comprehensive account of venture investing in Silicon Valley, showing how the region's distinctive network-based social capital is nurtured by hyper-connected investors and exploring the full range of approaches: VCs, angel investors, incubators, and growth-equity funds. It also explains what other regions, notably China, have learned from the Valley's example, asks what sorts of innovation venture capitalists may support in the future, and addresses the critiques of the VC business, from the under-representation of women and minorities to the suspicion that venture capitalists back “blitz-scalers” that wreak excessive disruption.
My account situates VC and angel investing in the context of the long-running debate on rival visions of capitalism. The tech finance of the Valley is a sort of anti-Wall Street version of finance: indifferent to Modern Portfolio Theory and quantitative models; long-termist rather than short-termist; involved rather than arms-length; immune to the accusation that financiers shuffle pieces of paper rather than funneling capital to the real economy. At a time when the short-comings of the "financialized" Anglo-American model of capitalism are widely debated, and when VC-backed "unicorns" are willing to defer public listings for longer than ever, Silicon Valley’s financial model may offer part of an alternative solution to the age-old problem of how best to funnel capital from savers to productive companies.
The Power Law has been nominated to the shortlist for the Financial Times 2022 Business Book of the Year. I remain active in public speaking, podcasts, television, and other forums discussing the role of venture capital in shaping modern capitalism.
Events
It is the nature of the venture-capital (VC) game that most attempts at discovery fail, but a very few succeed at such a scale that they more than make up for everything else. That extreme ratio of success and failure is the power law that drives the VC business, all of Silicon Valley, the wider tech sector, and, by extension, the world.
In The Power Law: Venture Capital and the Making of the New Future, Sebastian Mallaby has parlayed unprecedented access to the most celebrated venture capitalists of all time into a riveting blend of storytelling and analysis that unfurls the history of tech incubation, in the Valley and ultimately worldwide. By taking us so deeply into the venture capitalists’ game, The Power Law helps us think about our own future through their eyes.
The CFR Fellows’ Book Launch series highlights new books by CFR fellows.
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The astonishingly frank and intimate story of Silicon Valley’s dominant venture capital firms—and how their strategies and fates have shaped the path of innovation and the global economy.
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