Venture capital is unlike anything else I've seen in American commerce. People are vigorously seeking something that's often unattractive. It's extraordinary because markets are almost always efficient, but this one is not.
In order to back-solve to how we got here, let's start with history. As a professional market segment, the venture capital industry is only about 40 to 50 years old. In its infancy, it was probably a good invention in that it gave entrepreneurs the ability to seek out investors more easily. Before that, it was largely about networking, informal contacts and merchant banking, which meant seeking capital was unorganized. Now, it's organized: We can go to Google and search "venture capital firm in NYC" and instantly get a number to call. From that perspective, venture capital as a model helped because it gave us an identifiable supply of capital and, as such, has provided some value.
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