Senator Jim DeMint (R-S.C.) talked about President Obama’s jobs bill on Fox News’s On the Record with Greta Van Susteren on September 14, 2011:
“I would love to be able to work with the president on something, but he’s basically practicing what we call venture socialism. He’s basically taken the approach where it’s the government that needs to stimulate jobs.”
“Venture socialism” is a variation on the term “venture capitalism,” where capital is invested in high-risk, high-potential startup companies. In “venture socialism,” the government (rather than the private sector) provides capital to its favored companies.
The term “venture socialism” had been cited in print since at least 1981, but was seldom used before Senator DeMint’s criticism of President Obama’s policies.
Wikipedia: Venture capital
Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc. The typical venture capital investment occurs after the seed funding round as growth funding round (also referred as Series A round) in the interest of generating a return through an eventual realization event, such as an IPO or trade sale of the company. Venture capital is a subset of private equity. Therefore all venture capital is private equity, but not all private equity is venture capital.
In addition to angel investing and other seed funding options, venture capital is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company’s ownership (and consequently value).
Venture capital is also associated with job creation (accounting for 21% of US GDP), the knowledge economy, and used as a proxy measure of innovation within an economic sector or geography.
The Free Dictionary
Money made available for investment in innovative enterprises or research, especially in high technology, in which both the risk of loss and the potential for profit may be considerable. Also called risk capital.
What Does Venture Capital Mean?
Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.
Britain’s Inner Cities:
Problems and Policies
By Paul Lawless
London: Harper and Row
Certainly this idea of ‘venture socialism’ would appear eminently suitable for the expansion of cooperative enterprises here.
Open Networks, Closed Regimes:
The impact of the internet on authoritarian rule
By Shanthi Kalathil and Taylor C. Boas
Washington, DC: Carnegie Endowment for International Peace
Venture Socialism? Online Tourism and E-Commerce
While Cuba has been careful to avoid the development of a primarily commercial Internet, it has enthusiastically pursued certain economic benefits that the medium has to offer.
Pugs of War
Sunday, June 11, 2006
My Letter To “Forbes”
The following is what I sent to Forbes magazine in regard to their excellent cover story on ethanol production as a “replacement” for gasoline and the serious problems therein. I was struck by a particular thing in the article:
In reading your June 5 issue’s article on ethanol, I was struck by something that may require an addition to your magazine’s glossary. You refer to Vinod Khosla as a “famous (and wealthy) venture capitalist.” Yet in the next paragraph you describe his efforts to “tax oil production in (California) and use the proceeds to develop alternative energy resources” in which he is investing “in a handful of ventures.” Moreover, he is “all over Washington trying to drum up support.” It sounds like he’s trying to install a tap on taxpayer dollars to feed into businesses in which he invests. This is not “venture capitalism.” This is “venture socialism.” Perhaps you might consider using such a term in the future.
@ 2006-11-29 17:00:00
Portland is particularly Portlandish today (and that’s pronounced Port-LAND-ish)
Shared Route’s path began when Koenigsberg’s 23-year-old business partner, Jacob Rosenblum, dropped out of Evergreen State College and eventually persuaded his anesthesiologist father in Portland to use college money for ‘venture socialist’ projects.
Ah, yes. True socialism comes from men in their mid-20s spending their daddies’ money.
And if it was true socialism: wouldn’t they be giving away the rides?
‘The point is to make it fun instead of the corporate thing,’ Rosenblum says.
If he thinks startups are about having “fun,” I predict this brave experiment in ‘venture socialism’ won’t last till spring.
DeMint: Obama jobs bill is ‘venture socialism’
By Geneva Sands-Sadowitz - 09/15/11 09:18 AM ET
Sen. Jim DeMint (R-S.C.) said President Obama is practicing “venture socialism” with his jobs proposal.
The conservative Tea Party favorite played off the term “venture capitalism” in criticizing Obama’s ideas for improving the economy.
“I would love to be able to work with the president on something, but he’s basically practicing what we call venture socialism. He’s basically taken the approach where it’s the government that needs to stimulate jobs,” DeMint said Wednesday on Fox News’s “On the Record with Greta Van Susteren.”
New York City • Banking/Finance/Insurance • Friday, September 16, 2011 • Permalink