Venture Capital Industries

nnovation is an increasingly knowledge-intensive activity, and the link between such activity, small firms with high growth potential, and their funding through venture capital has been vividly established during the recent technological boom. Venture capital has provided financing for some of the most dynamic, innovative firm clusters in the world. During the past two decades, the venture capital investing phenomenon has diffused internationally—there are now 36 national venture capital associations. A short roster of U.S. firms funded by venture capital includes 3Com, Amgen, Cisco, DEC, Federal Express, Genentech, Intel, Oracle, and Sun Microsystems. In Taiwan, China, the world's leading maker of notebook computers, Quanta, and the world's largest motherboard maker, Asustek, received financial support from venture capitalists. In Israel, firms receiving venture capital funding include Amdocs, Checkpoint, and Mercury Online. From this list, it is clear that venture capital has been an important contributor to economic growth. Yet, despite this diffusion, in most nations the venture capital industry itself remains fragile and of limited significance. This chapter examines the development and current condition of the venture capital industries in 11 East Asian economies. Interest by East Asian nations in venture capital can be traced back to at least 1951, when a director of Nomura Securities visiting New York was quoted by the Wall Street Journal ("Japan's Recovery" 1951) as saying that Japan suffered from