The difference between Venture Capital and Venetian Capital

To a thoughtful student of European history, Silicon Valley of the 21st century might cause deja vu.  For there was another culture and place in which entrepreneurs and financiers lived within a small radius of one-another, and were constantly bumping into one-another at social and business gatherings: 15th century Venice.

• Venice was isolated from Florence, Rome, and Constantinople in much the same way that Silicon Valley is isolated from New York, Los Angeles, and Washington, D.C. today.
• Venice was geographically limited in its extent by the lagoon in much the same way that Silicon Valley is limited in its extent by the mountains and San Francisco Bay.
• Venice was home to an aspiring group of artisans who had something to prove to the elder statesmen in Florence and Rome in much the same way that Silicon Valley is home to entrepreneurs with something to prove to the CEOs, investment bankers, and politicians in New York and D.C.
• Venice was home to a network of merchant bankers, many of whom knew one-another personally and shared in the burden of diligencing investment in much the same way that Silicon Valley is home to a network of venture capitalists who know one-another and share in the burden of diligencing investments in new ventures
• By the mid-15th century in Venice, most of the prominent merchant bankers knew who the best artisans were, and were happy to work exclusively with those artisans on deal after deal much as Silicon Valley venture capitalists are happy to work exclusively with the same serial entrepreneurs on startup after startup.

But there is one way in which Silicon Valley differs from 15th century Venice, which went on to spread its technology and art throughout Europe in the centuries thereafter:

• Venice, unlike Silicon Valley, was home to the birth of patent law in the late 15th century.

The Venetians were smart enough to realize even in the 15th century that they would have to feather the nest for new artisans and inventors in order to ensure that a pipeline of new art and technology kept flowing freely. Not coincidentally, when Venetian glassworkers carried their new technology with them to the rest of Europe, they carried also, like the fire of Prometheus, the idea of a patent system.

Comments

[anon]

"Dilligencing" is a cancer on the English language.

[Ravenor]

Very nice piece...it is a novel comparison to me, but seems right on the money.

[Allan]

Interesting post. I'm sure it's a little generalized but some of the comparisons are appropriate. Our patent system is a bit broken with overly broad business method patents. Venice never had to deal with digital piracy issues which are a whole dimension removed from simple physical form piracy. Can you tell me more about Venetian Capital Management? I'm interested in your approach and services.