【文章內(nèi)容簡(jiǎn)介】 pital investments depend on clearcut route to being able to liquidate their investments. Most high tech startups, as many as 4 out of 5, fail and the investment is written off. However, a successful venture capitalist will manage to make at least one investment that brings a return to more than make up for the losses. Because of the risky nature of these investments, venture capitalists rarely make investments in profitable but slow growing businesses. Such businesses take a long time to go public and do not offer a big enough potential return. Rather, venture capitalists look for panies with the potential of outstanding return on investment. In Silicon Valley, this potential is often referred to as having an anticipated revenue stream of a hockey stick. Companies engaged in developing high tech breakthroughs are more likely to experience the hockey stick phenomenon than say a chain of fast food restaurants. This is why venture capital goes to where high tech breakthroughs are being made. While the need to make huge return on investments explains the attraction of venture capital to the high tech industries, it does not explain why Silicon Valley can attract such a disproportionate share of the venture capital. To understand that, it is necessary to examine the culture and other characteristics of Silicon Valley.The Silicon Valley culture and infrastructure In many ways, Silicon Valley is unique even within the . No other place is as diverse as Silicon Valley. Silicon Valley has room for people from all over the world and they all e, attracted by the pleasant weather and the diversity of people. Diversity is crucial in high technology because diversity automatically ensures many different ways of thinking and looking at problems leading to a host of solutions. Only in this manner can the best solution be synthesized out of contending ideas and emerge as the mercial winner. In a way, high tech innovation is similar to Darwinian survival of the species. Namely, endangered species bordering on extinction suffer from narrow gene pools while healthy species enjoy wide and diverse gene pools. In Silicon Valley today, as one indication of its inclusive diversity, over 30% of the panies are founded or managed by immigrants from China, Taiwan and India. The best and brightest are attracted to Silicon Valley not only because of the inclusive nature of this placecertainly overt discrimination because of someone’s skin color and other differentiation has largely disappeared. The other reason is that entrepreneurs in Silicon Valley can readily find others of like mind to band together and approach venture capital investors with business plans and proposals. In Silicon Valley, venture capitalists do not refuse to invest on someone just because the particular entrepreneur es from a failed venture. Since most ventures do fail, the investor gives the entrepreneur credit for having gained valuable experience even if the previous venture failed. This tolerance for failure is crucial in encouraging entrepreneurs to take risks and start panies. The importance cannot be over emphasized. In Silicon Valley, “it is OK to fail.” No other place has quite the same openminded attitude. With the success of high tech industries and the growth of venture capital in Silicon Valley, the economic infrastructure also expanded and became part of the environment. Infrastructure needed to support high tech panies include law firms and accounting firms to help them form proper legal structure and organized to meet Securities Exchange regulations with proper stock ownership incentive programs for not just the founders but also for employees joining the high tech enterprise. The legal and accounting firms also help the venture capital firms structure their investments and keep track of their gains and losses. Other parts of the total infrastructure include public relations and advertising firms that serve the marketing and munication needs of high tech panies. Investment banks help the panies with initial public offering and followon secondary offerings in the equity market and propose mergers. Specialized mercial banks and leasing firms were established just to serve the high tech panies that more traditional banks dare not touch because the latter did not understand the nature of high tech panies and were frightened by its high mortality rate.An entire profession emerged that called themselves “free lance technical writers.” These writers contract their services to high tech panies to help them write user’s manuals, technical brochures and a host of documents to help the panies convey what they have developed to the public. Human capital firms helped high tech panies set employee hiring policies and help locate and recruit people with the needed skill sets. Successful entrepreneurs often retired from active management and became consultants and advisors to venture capital firms and to other startups. Arguably the trend to outsourcing gained impetus from Silicon Valley because young startups have limited resources and most in need of outside assistance. Most models of Apple Computer, for instance, were designed by independent product design services and made by contract manufacturers. Frequently overlooked but a vital part of the Silicon Valley infrastructure is the widespread presence of professional associations. These associations organized along industries or mon interests meet regularly. Ostensibly, these meetings feature speakers and topics of general interest to its membership. Equally important, these gatherings offer opportunities for professionals to meet regularly with each other and form friendships, to network and exchange ideas and resumes and to assess the potential of each as a future cofounder of the next new startup enterprise. The Churchill Club meets frequently hosting panel discussions on high tech development and regularly draws a