The role of venture capitalists in infrastructure?

A decent and relatively new blog about being a venture capitalist by Fred Wilson got me thinking about how venture capitalist firms are a different type of “organizational entity” as compared to universities or industrial manufacturing firms, in particular, their role in the development, repair, and replacement of infrastructure. While large entities with monopolistic control over primary infrastructure (e.g., roads, water systems, etc.) are usually these odd things called “states,” increasingly venture capitalists are playing a role in the development of all sorts of “modern” infrastructures that are everybit as significant (i.e., bio-engineering, IT, etc.). The difference being, perhaps, in their underlying motivations.

Venture capitalists are looking for high-potential and high risk investment opportunities with early stage startup companies that show signs of future growth and who are in need of seed money. I assume/guess that these sorts of companies produce different types of infrastructure as compaed to monolithic and monopolistic state endeavors. While it is conceptually sloppy to refer to a state as an actor, I must; I assume that states are motivated to invest in precisely the opposite — they want low-risk investment opportunities with foreseeable benefits and prefer to work with established or “prooven” companies to get the infrastructure they want.

Now, that might mean that while venture capitalists and states are both investing in infrastructural innovations (in fact, venture capital investments are sometimes a proxy for or indicator of innovation in a given nation or sector of the economy) are they investing in the same things?

I think not, given their motivations for investment, and some theoretical and empirical comparisons to states would make venture capitalists potentially exciting for STS.

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One thought on “The role of venture capitalists in infrastructure?

  1. <!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <html><head> <meta content="text/html; charset=utf-8" http-equiv="Content-Type"> </head>One way of approaching this may be to look at how the pieces of a given infrastructural assemblage are put together and developed. Venture capitalists may be characterized by an overriding concern with increasing the value of an asset (of either the assemblage as a whole or some portion of it) in order to eventually sell it. In that respect they may differ from states – which (may) tend to look at infrastructures as public goods – and other sources of capital – stakeholders which may be more interested in the generation of actual revenue in running the infrastructure as a business. In the most general terms, I would therefore guess that the market valuation of an infrastructure will become a salient aspect of how an assemblage shapes up once venture capitalists are in the fold. Could we possibly identify particular value-added strategies of enrolment – as opposed to other, possibly more stability-minded strategies of network-building? That could imply that we might get less reliable assemblages as a result of vc financing and influence.<br/><p>————————————<br/>. . . . . . . . sent via BlackBerry??</p></html>

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