Solving the problem of abundance: venture capital and the making of asset-driven inequalities

Nils Peters

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The 2010s were an era of abundant capital for investors but limited opportunities to put it to profitable use. This paper traces the origins of dealing with the ‘problem’ of having to convert large accumulations of cash into appreciating assets. It puts venture capitalists in the US at the center of this history. Charting venture capital’s 1950s emergence, 1960s formalization, and 1970s institutionalization, I show how early venture capital investors built a financial infrastructure that safeguarded the appreciation of their assets. Venture capitalists’ influence increased as institutional investors (as funders) and startup employees (as investees) became enrolled in this infrastructure and oriented their actions toward its imperatives. I argue that in their handling of abundance, venture capitalists constructed and deepened asset-driven inequalities. Empirically, the paper makes a contribution by demonstrating that vast accumulations of (personal) wealth played a decisive role in this process and highlights the importance of stark inequality well before the neoliberal turn or quantitative easing. Conceptually, I show that venture capitalists’ solution to a personal problem became useful at a much larger scale. The paper argues that we should read this influence as conditioned on elite surplus and access to a financial infrastructure.

Keywords: venture capital; financialization; infrastructure; asset economy; limited partnership; abundance (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2024-11-04
New Economics Papers: this item is included in nep-fdg and nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Review of International Political Economy, 4, November, 2024, 32(2), pp. 287 - 309. ISSN: 0969-2290

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